Union Bank of India will tap the capital market through public offer of eight crore shares which could fetch it about Rs 800 crore to meet Basel-II norms and other business requirements. | |
| This will be apart from its plan to raise Rs 700 crore Tier-II capital this year to keep pace with asset growth as the Mumbai-based bank is targeting a business of Rs 1,22,000 crore this fiscal. |
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| "We may go for public issue of eight crore shares. But not in one go, may be in two tranches," chairman K Cherian Varghese said. |
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| The public offer which could hit market this fiscal will bring down government stake in the bank to 51 per cent from 60.85 per cent. |
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| At the current price of Rs 106 a share, the bank can easily raise up to Rs 800 crore by offering eight crore shares. |
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| The bank is raising capital from market as its capital adequacy ratio is likely to come down to 10.75-11.25 per cent from 12 per cent after implementation of stringent Basel-II norms in 2007 that prescribes for higher provisioning for operational risk. |
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| The bank has set a business target of Rs 1,22,000 crore in 2005-06 from Rs 1,00,000 crore in the previous fiscal. |
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| "We expect deposits to grow by 16.5 per cent to Rs 72,000 crore and advances by 21 per cent to rs 49,500 crore in this fiscal," Varghese said. |
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| The bank is also raising Rs 700 crore Tier-II capital this fiscal keeping pace with asset growth. |
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