UCO Bank to finalise FPO after Rs 375-cr infusion

Public sector lender UCO Bank will finalise its proposed follow-on offer after fund infusion of nearly Rs 375 crore from the governemnt under its recapitalisation scheme.

“We are interested in the FPO but we are not in a hurry. We are looking at the government to put in Rs 375 crore, which we think will come shortly and then we will decide on it. This fund infusion from the government would strengthen our capital structure, which in turn would fetch better value,” said Ajai Kumar, executive director, UCO Bank. The bank plans to issue 60 million equity shares through the FPO.

As part of capital restructuring, the bank had received Rs 450 crore in March 2009 as capital infusion. The bank has sought close to Rs 1,300 crore from the government.

In December 2008, UCO Bank restructured the bank's equity capital by converting Rs 250 crore out of the total equity capital of Rs 799.36 crore into perpetual non-cumulative preference shares (PNCPS).

The capital restructuring led to the government stake coming down from 74.98 per cent to 63.59 per cent, which is expected to come down to about 58 per cent after the FPO.

In the Apr-June quarter, the bank expects about 19 per cent growth in both credit as well as deposit, and a Net Interest Margin of 2.6 per cent.

The credit growth was mainly driven by large and mid-corporate sector and the bank would lay thrust on the retail sector moving forward, he said.

The bank is targeting to clock a profit of Rs 1,350 crore during the current financial year.

"We are aiming at a business of Rs 2.45 lakh crore in 2010-11 and a profit of Rs 1,350 crore," Kumar told shareholders at the bank's seventh annual general meeting here.