Calcutta, Sept. 27: Uco Bank has approached the Union finance ministry for restructuring its capital.

“We are talking to the government for restructuring the capital of the bank. However, the proposal has not yet been tabled before the bank’s board for approval,” chairman and managing director V. Sridar said.

The restructuring of capital had become necessary because of its large size (Rs 799 crore), negligible reserve entailing low EPS and, therefore, low market price of the bank’s share.

The bank is also eager to restructure its capital to meet the Basel?II norms.

Capital restructuring is also essential to Uco Bank as it is mulling its second public issue.

The bank has several options but it will go for the preference share route.

A portion of the equity would be converted into preference shares first to reduce its size. The reduction could boost the price, making the situation favourable for the public issue.

However, bank officials said much will depend on the Union finance ministry, which has to suggest how much of the equity is to be converted into preference shares and at what price.

The bank had launched its first public issue in September 2003, offering a Rs 10 share at a premium of Rs 2 each, totalling Rs 240 crore.

In 2004-05, the bank’s net profit of Rs 346 crore (Rs 435 crore in 2003-04) was lower by more than 20 per cent due to a 45 per cent drop in treasury profit at Rs 192 crore (Rs 351 crore) and higher provisioning (29.95 per cent) at Rs 473 crore (Rs 364 crore).