UBI to go for rights issue of Rs 300 cr

Kolkata-based United Bank of India (UBI) is planning to go for a rights issue of about Rs 300 crore by the end of this financial year.

The bank got the board approval for the rights issue on November 21st, and would soon approach the Reserve Bank of India and Union government for the same, said Bhaskar Sen, chairman and managing director, United Bank of India.

This apart, the bank is planning to raise about Rs 250 crore as perpetual debt in several tranches over the next quarter. The bank has a shareholders’ approval to raise Rs 250 crore through perpetual debt, with a green shoe option of raising another Rs 250 crore.

“In our board meeting on November 21st, we discussed the requirement for capitalization in the bank before we migrate into Basel III norms. We evaluated all the possible options, including perpetual bond issuance and rights issue,” said Sen.

The government shareholding in UBI is about 81 per cent.

“Whether the government shareholding will come down or not will depend if the government exercises its right to subscribe to the rights issue,” said Sen.