The Telegraph
Since 1st March, 1999
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Dena Bank to tap market again

New Delhi, Oct. 17: State-run Dena Bank, which was recently served a notice by the Reserve Bank of India (RBI) for its weak financials, today said the board of directors will meet next week to consider a second public issue.

“The proposed issue will be subject to clearance from the government, which holds 71 per cent of the equity, and RBI,” the bank said.

In February this year, RBI had slapped a ‘prompt corrective action (PCA) notice’ on the bank, to stem the bank’s sliding profitability

The central bank had also suggested a 17-point action plan for Dena Bank which would help restructure its financials. These included restrictions on the bank entering new business, expansion of the risk weighted assets and skipping dividend.

RBI said the bank would not be able to hold or renew costly commercial deposits and have to submit a plan for stepping up its capital to the required level.

The measures had helped Dena Bank improve its earnings per share (EPS) for the past 2002-03 financial to 4.37 from — 7.37 a year earlier. The capital adequacy ratio of the bank also inched up to 9.33.

Analysts said the current boom in the share market would help the bank fetch a higher price for its stocks.

“Dena Bank’s issue should be priced around between Rs 15-20 a share,” said an analyst. Currently, the bank’s scrip is hovering around Rs 20.

In the first quarter of the current financial 2003-04, the bank had reported a net profit of Rs 29 crore against Rs 3.5 crore in the year-ago period. Advances for the period stood at Rs 8,435 crore compared with Rs 7,522 crore in the same period last financial.

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