The Union Bank of India’s board on Wednesday approved a capital raising plan of Rs 10,100 crore, the lender informed the exchanges on Wednesday.
The bank will raise upto Rs 8,000 crore through a public issue, rights issue or via private placement including qualified institutional placement (QIP) of a private placement.
“Raising of equity capital not exceeding Rs 8,000 crore in tranche(s) within the overall limit of Rs 10,100 crore, through Public Issue (i.e. Further Public Offer) and/or Rights Issue and/or Private Placements including Qualified Institutions Placements and/or Preferential Allotment or a combination(s) thereof to any eligible institutions and/or through any other mode(s) subject to the approval of Government of India, other regulatory authorities and approval of Shareholders’ of the Bank,” the bank said in a notification to the exchanges.
The remaining amount will be raised through additional tier-I (AT1) bonds, and or tier-II bonds.
As on December 31, 2022, the state-run lender’s capital adequacy ratio was 14.45 per cent with common equity tier-1 capital of 1.56 per cent.
Most banks have been taking board approvals in the new financial year for capital raising to support their growth plans.
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After staying sluggish for the last few years, credit growth for the previous financial year touched the 15 per cent mark. Bankers expect the momentum in credit pick up is expected to continue in the current financial year too.
Earlier this month, the board of the country's biggest lender State Bank of India (SBI) approved a fund raise of up to $2 billion (about Rs 16,000 crore) in FY24 through bonds, in single or multiple tranches.
During end March, another public sector lender Punjab National Bank (PNB) said it plans to raise upto Rs 12,000 crore in capital through additional tier I bonds (AT1 bonds) and tier II bonds in the financial year 2023-24.
Union Bank (I)