Union Bank to Launch Rs 1,390-cr QIP Issue in Q2
By PTI | Published: 01st June 2014 12:43 PM |
MUMBAI: With markets on a roll, the state-run Union Bank of India is set to launch its Rs 1,386-crore qualified institutional placement (QIP) issue in the second quarter of this fiscal, a top official has said.
"We will be launching the issue in the quarter starting July, for sure. We have reason to believe that it will be a successful one," Union Bank Chairman and Managing Director Arun Tiwari said over the weekend.
The infusion was first planned in the fourth quarter of the past fiscal, but was called off considering poor market conditions.
Even the SBI issue in January could not be fully sold as the nation's largest lender could raise a little over Rs 9,000 crore against its plan to mop up over Rs 9,800 crore.
However, Tiwari exuded the confidence that the issue will be a successful one and pointed out to the USD 350 million bond issue done by the bank in April, where it mopped up money at a rate lower than many other large lenders which sold bonds at a higher coupon.
"We were able to raise the money without a roadshow.
We launched the issue, did a few calls and the money got raised," he said.
The planned QIP will improve its core tier-I capital, which had stood at 7.54 per cent in March quarter, by 0.50 per cent, Tiwari said.
He added that the bank has embarked on a capital saving programme last quarter and was able to improve the core ratio by 0.11 per cent through scrutiny of the books.
"Capital needs to be allocated only after a loan is disbursed, but we were allocating it at the time of sanctions.
It is not necessary for a company to use the entire funding line and hence, we could unlock the capital devoted for such non-utilised amounts," a senior bank official said.