Union Bank plans to raise Rs 2,000 crore by issuing Tier-II bonds

Public sector lender Union Bank of India plans to raise up to Rs 2,000 crore by issuing Tier-II bonds. This will improve the bank’s capital adequacy which will help grow business and meet regulatory norms.

The board has approved the enabling resolution to raise the capital by issuing Basel III-compliant bonds.  

The bank also has flexibility to raise additional equity from the market, with government stake at 89.1 per cent as of June 30. Over the past three financial years, the government has infused around Rs 41,397 crore into the combined entity — two public sector lenders Andhra Bank and Corporation Bank merged into Union Bank on April 1. 

The bank’s common equity Tier-1 ratio, Tier-I CAR and overall CAR stood at 8.4 per cent, 9.5 per cent and 11.6 per cent, respectively, as of June 30.

CRISIL has assigned a rating of 'AA+/Negative' to the bank’s Rs 2,000 crore of Tier-II bonds (under Basel III). It also reaffirmed its ‘CRISIL AA+/Negative’ rating on other long-term debt instruments. 

Meanwhile, Canara Bank said it has raised Rs 1,012 crore by issuing Basel III-compliant bonds. The bank said it issued 10,120 non-convertible, perpetual, taxable, subordinated, fully paid up, unsecured bonds with coupon of 8.30 per cent.