MUMBAI: Share prices of Lakshmi Vilas Bank (LVB), a private sector bank, shot up 13.8 per cent to Rs 81.30 on Wednesday after the bank announced a board meeting to consider fundraising plans after the close of trading hours on Tuesday. The stock had fallen from a 52-week high of Rs 121.74 due to poor performance and rising bad loans. It had hit a 52-week low of Rs 54.80 on February 25 following a ratings downgrade by Brickworks.
The sharp rise in share prices, especially on Wednesday, led to stock exchanges asking the bank for clarifications amidst speculation about potential investors who would bring in fresh equity capital.
LVB on Tuesday said, “A meeting of the board of directors of the bank would be held on Friday, March 8, 2019, to consider and approve the raising of funds by way of issue of equity shares of the bank on preferential basis and issuance of unsecured, subordinated, fully paid up, non-convertible, non-cumulative, BASEL Ill-compliant, perpetual debt instruments in the nature of debentures for inclusion in Additional Tier I capital of the bank on private placement basis, to certain investors”.
Brickworks Ratings had placed the bank on “credit watch with developing implication” as the bank intended to infuse capital before the end of the current fiscal to meet the regulatory capital threshold and also to bring down the net NPA below 6 per cent. “The timely infusion of capital will be a key rating sensitivity factor,” Brickworks Ratings said.