United Bank Plans Rs 200 Cr Mop-Up Via Placement

United Bank of India (UBI) is planning another round of fund mobilisation through private placement. It is aiming to mop up Rs 200 crore through this route. According to sources in the bank, the bonds will be placed in the market some time towards the end of the next month.

With a lock in period of three years, the bonds will probably bear 11 per cent rate of interest for a period of five years. UBI had privately placed a Rs 200 crore five year bond in March this year.

The bank managed to raise Rs 140 crore at that time. The government's has refused to infuse fresh funds into UBI in the last fiscal, forcing it to borrow from the market. Without the capital infusion, UBI's capital adequacy ratio would have been around nine per cent, the floor fixed by RBI. At present, the bank's CAR stands at 10.44 per cent.

 

Meanwhile, UBI is planning to increase the number of branches to be closed to around 100. The bank had initially planned closure of 55 branches and has already closed down 18. The number of regional offices to be closed down also may be increased to eight, said sources.

UBI had recently announced closure of such offices. After its VRS programme, the bank is taking a relook at its manpower deployment schedules. The closures are connected to this exercise.

UBI is also revising its business target for the next three years. The bank's total business crossed Rs 25,000 crore in 2000-2001 and encouraged by this, the bank had initially pegged the target for 2001-02 at Rs 30,000 crore. Deposits at Rs 18,477 crore was targeted to rise to Rs 22,000 crore in 2001-02. Advances at Rs 6,560 crore, was expected to rise by Rs 2,000 crore in the current fiscal.

The thrust in 2001-2002 would be on retail lending. The segments receiving special focus would be education loans, house building loans and retail trade finance.

UBI declared a 30 per cent dip in net profits to Rs 19.14 crore in 2000-01. The profits would have been higher but for an additional Rs 67 crore towards VRS and staff related expenses. Outgo on account of ex gratia amounted to Rs 5,251 crore, while gratuity payment was Rs 17.70 crore. Outgo of funds for pension was Rs 17.09 crore. Interest income at the bank was Rs 1930.82 crore while other income was Rs 164.74 crore.