Post some nifty turnaround in its operations, United Bank of India is set to go for some aggressive fundraising with an aim to shore up its capital base by Rs 1,550 crore by end of this fiscal.
Out of this, the Kolkata-based bank plans to raise about Rs 1,000 crore of equity via routes including qualified institutional placement (QIP) and balance through internal generation and debt raising, it said in a filing.
"With the estimated business growth in 2014-15, the bank requires capital of Rs 6,930 crore, i.e. additional capital of Rs 1,550 crore to maintain capital to risk weighted asset ratio (CRAR) at 10% under Basel III regulations. This additional capital requirement can be met by a combination of internal generation, issuance of equity and Basel III complaint debt instruments," UBoI said.
The additional capital infusion would take its capital adequacy ratio to 10% by March 2015 from a level of 9.81% now under Basel III norms, it said.
The bank is seeking approval of the shareholders to issue equity to the extent of Rs 1,000 crore including premium.
"In order to meet the requirement of additional capital funds for expanding and achieving the targeted business growth and for general lending purpose, the bank proposes to raise funds by way of follow-on public offer, QIP, preferential allotment including preferential allotment of equity by conversion of PNCPS (Perpetual Non-Cumulative Preference Shares) or such other suitable means, by issuance of equity share of Rs 10 each at such prices which may be determined close to the issue," it said.
In addition to these, the bank said it may convert into equity a part of PNCPS of Rs 800 crore issued earlier to the government as these don't conform to Basel III norms, and hence liable to get phased out over a period of 10 years.
The authorised capital of the bank is Rs 3,000 crore, while its paid-up capital is Rs 554.75 crore as on March-end.
The government infused Rs 700 crore as capital in December through preferential allotment. With this, government's stake in the bank stands at 87.99%.
"The bank has adopted multi-pronged approach to address the issue (of capital adequacy) which includes extensive recovery, reduction of NPA, strengthening monitoring, reorganising its credit portfolio by getting rid of capital guzzlers, and cost control at all levels," it said.