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Deepak Narang in Calcutta on Tuesday. A Telegraph picture
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Calcutta, March 12: The shareholders of the United Bank of India (UBI) today approved the preferential allotment of shares to the government, which is expected to result in a capital infusion of Rs 100 crore into the state-run lender.
The UBI has planned a preferential allotment of 1.37 crore shares for Rs 72.95 apiece. Following the allotment, the Centre’s stake in the bank will rise to 82.23 per cent from 81.55 per cent.
The bank is looking to complete the allotment of shares before the end of this fiscal. It hopes the additional cash to strengthen its tier-1 capital and fund expansion.
The UBI shares were down 0.47 per cent at Rs 64.20 on the BSE today.
Executive director Deepak Narang said, “Post this preferential allotment, as on March 31, 2013, the tier-I CRAR (capital to risk-weighted assets ratio) after the infusion of capital will enable the bank to fund expansion. Besides strengthening the capital base, the cash infusion will enhance the lending capacity.”
As of December 31, the bank’s capital adequacy ratio stood at 11.88 per cent, which is expected to improve to 12 per cent by the end of the fourth quarter ending March.
In November, UBI’s board of directors had approved the issue and the allotment of unsecured perpetual tier-I bonds to raise Rs 500 crore through private placement.
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