Global Trust Bank To Raise $10m Ifc Loan

The board of Global Trust Bank (GTB) has decided to raise $10 million (Rs 39 crore) from the International Finance Corporation to strengthen its tier-II capital.

GTB chairman and managing director Ramesh Gelli said in Hyderabad that the bank will raise the fund in the form of foreign currency of which $5 million will have an option to be converted into fully paid-up equity shares.

The remaining $5 million will be unsecured subordinated bond. The entire $10 million will be fully subscribed by IFC. The convertible loan has a maturity of 18 months and the price of conversion will be fixed at Rs 60 per share on the Securities and Exchange Board of India's (Sebi) approval.

 

Following the subscription of IFC, the capital adequacy ratio of GTB will move up from 10.6 per cent to 12 per cent. Besides, it will also increase the bank's equity base by 3.6 per cent and hike IFC's stake in the bank to 13 per cent.

GTB will seek the shareholders consent for raising the funds at the extraordinary general meeting of the bank which is scheduled for March 23.

In December 1996, the bank has raised Rs 20 crore by way of private placement to increase tier-II capital. It has also seek clearance from the Reserve Bank of India (RBI) and ministry of finance.

The interest over the unsecured portion works out to 2.12 per cent over the London inter-bank offered rate (Libor) and the interest on the convertible portion works out to be 1.37 per cent over Libor.

Gelli said the Asian Development Bank (ADB) has also shown interest in picking up additional equity in the bank over and above the Rs 10 crore it has invested in the Rs 104-crore subscribed capital.ADB's interest in subscribing to the tier II capital also figured in the GTB board meeting, but no decision has been taken.