New Delhi, Dec. 6 (PTI): After its Rs 288-crore IPO, Union Bank of India plans to raise Rs 300 crore through private placement of debt issue this fiscal to fund expansions while earmarking Rs 150 crore for technology upgradation. “We are planning to raise about Rs 300 crore through subordinated debt to improve the Tier-II capital,” Union Bank chairman V. Leeladhar said here. The debt issue would be privately placed with banks within this fiscal.
Union Bank returned Rs 58 crore worth of equity to the government and then tapped the market on August 20 for raising Rs 288 crore to bring down government holding in the bank to 60.8 per cent.
After the IPO, priced at Rs 16 a share, the equity base of the bank has widened to Rs 460 crore from Rs 338 crore in March 2002.
The 83-year old bank improved its capital adequacy ratio to 11.5 per cent from 10.8 per cent before the IPO, he said.
The additional resources were required in view of the higher growth in credit, especially in the retail segment, which is slated to grow by 15-20 per cent.
Leeladhar said the bank expects its deposits to grow to over Rs 42,000 crore this fiscal from Rs 39,974 crore while advances were slated to go up to Rs 25,000 crore from Rs 21,383 crore last fiscal.
As part of retail thrust, UBI has tied up with New India Assurance and HDFC Standard Life for distributing their products through the bank branches. “We are targeting a business of over Rs 75,000 crore this fiscal as against Rs 61,177 crore last fiscal,” he said.
Leeladhar said UBI has earmarked Rs 150 crore for its initiatives during the next three years. “We will interconnect at least 500 more branches,” he said, adding about 120 branches are now connected.
The bank has engaged Infosys for core banking solutions while Wipro would provide the necessary IT hardware, the Union Bank chief said.