Union Bank of India raises Rs 1,100 cr via tier-I, II bonds

The bank has sought capital injection of about Rs 950 crore to fund business growth

Public sector lender Union Bank of India has raised about Rs 1,100 crore by issuing tier-I-and-II bonds, taking its total capital adequacy ratio close to 12 per cent.

The bank has issued tier-I perpetual bonds for Rs 300 crore. They carry a coupon rate of 9.29 per cent. Also, Mumbai-based Commercial Bank raised Rs 800 crore via 10-year bonds, which is included in computing tier-II capital adequacy.

A senior bank official said the capital adequacy was comfortable. Besides raising capital through bonds, the bank had sought equity infusion from the government, which holds 54.35 per cent stake.

The capital adequacy at the end of September 2012 was 11.39 per cent, down from 12.54 per cent a year ago. The tier I, consisting mostly of equity and reserves, was 8.17 per cent at the end of September 2012 as against 8.54 per cent in September 2012.

The bank has sought capital injection of about Rs 950 crore basically to fund business growth. However, the government is yet to indicate how much capital it will inject in 2012-13, an official said.

The stock closed higher by 0.32 per cent at Rs 263.75 on Bombay Stock Exchange on Monday.