OBC plans public issue this fiscal

Oriental Bank of Commerce (OBC) cleared a proposal for a public offer of 50 million shares at a premium. The bank plans to hit the market during the current financial year itself.

It will decide on the price band and work out other details after it receives government clearance, a senior OBC executive said over the phone from Chennai. He added that the bank hopes to raise over Rs 1,300 crore from the issue.

The bank will shortly approach the government for permission for the public offer. Post-issue, government holding is expected to decline to around 53 per cent from the present 66.48 per cent.

Besides raising capital, the board discussed a host of other issues including the appointment of a global consultant to work out the details of the merger of Global Trust Bank.

OBC is the latest among a host of public sector banks including Punjab National Bank, Bank of Baroda and Dena Bank which are tapping the markets to raise funds for meeting higher capital norms that would be effective from the end of December 2006.

On Tuesday, the bank's share closed 1.45 per cent higher at Rs 327.05 on the Bombay Stock Exchange and 1.53 per cent higher at Rs 327.30 on the National Stock Exchange.

At the end of September 2004, mutual funds held 3.17 per cent stake in the company, while banks and insurance companies accounted for 9 per cent of the shares and FII holding was estimated at 12.32 per cent. The bank's equity shares have a face value of Rs 10 each and the premium is to be decided through a book-building process.

OBC has a share capital of Rs 193 crore and reserves worth Rs 2,484 crore. It would use the additional capital to sustain 30 per cent growth in business targeted at Rs 80,000 crore during the current financial year.