Uco Bank to raise Rs 500 crore
Uco Bank is looking to raise Rs 500 crore through its Basel III compliant tier-2 bonds in a bid to strengthen its capital base.
The capital adequacy ratio of the bank stood at 10.88 per cent at the end of the April-June quarter of 2019-20 with the government holding a 92.52 per cent stake as of June 30. The board of directors of the bank is set to meet on Thursday (October 24) to consider the issue, the bank said in a statement to the bourses on Monday.
Uco Bank is among the four banks that have been mandated by the government to increase their regional focus along with Indian Overseas Bank, Bank of Maharahstra and Punjab and Sind Bank. The bank was not part of the merger of public sector banks announced in August.
The bank also features in the list of 10 public sector banks where the government has decided to infuse a total of Rs 55,250 crore in a bid to shore up their capital base and strengthen balance sheets.
While the bank’s board has approved the preferential allotment of Rs 2,130 crore from the government, an extraordinary general meeting has been called for the approval of shareholders.
Earlier in June, the bank had also raised Rs 500 crore from LIC through the issue of Basel III compliant tier 2 bonds.
Uco Bank has estimated a capital requirement of Rs 4,500-5,000 crore for the entire fiscal. While most of it is coming from the government, the bank may have to consider institutional placements to raise capital in a volatile market.
The bank’s scrip was up 0.51 per cent at at Rs 11.85 over the previous close at the Bombay Stock Exchange.
The bank has suffered a net loss of Rs 601.45 crore for the June quarter against a loss of Rs 633.88 crore a year ago.
The gross NPA ratio of the bank during the quarter was 24.85 per cent, lower than 25.71 per cent a year ago.
The bank also cut down its net NPA during the quarter to 8.98 per cent from 12.74 per cent last year and hopes to bring it down to less than 6 per cent by March 2020 to come out of the PCA framework of the RBI.