State-owned lender Union Bank of India on Sunday said that its board will meet next week to consider raising equity capital by way of various modes such as public or rights issue. The board of directors of the bank will meet on November 25 to consider seeking shareholders' approval for raising capital. The public sector lender, however, did not disclose the amount of capital it intends to raise.
In an exchange filing, the lender said that it will raise funds through various modes including further public offering, rights issues, private placements including qualified institutions placement, preferential allotment to the Government of India and through other modes.
The fund raise is subject to approval of the government of India and other regulatory authorities.
"The meeting of the board of directors of the company is scheduled on November 25 to consider and approve raising of equity capital by way of various modes such as public issue (i.e. follow-on public offer) and/or rights issue and/or private placements, including qualified institutions placement and/or preferential allotment to the Government of India and/or other institutions and/or through any other mode(s) subject to approval of the Government of India and other regulatory authorities," Union Bank of India said in a filing to the BSE.
Earlier in June, the bank's board had approved a plan to raise up to Rs 10,300 crore in capital for current financial year 2020-21. Under the plan, the bank intends to raise up to Rs 6,800 crore through a public issuance, rights issuance or private placement. It also plans to raise up to Rs 9,400 crore by offering additional Tier 1 and/or Tier 2 bonds.
The amalgamation of Andhra Bank and Corporation Bank with Union Bank of India in April 2020 has eroded its capital buffers. Recently, S&P Global Ratings said that Union Bank's earnings will remain muted for the fiscal year ending March 31, 2021, as sizable pile of stressed assets may restrict earnings.
Shares of Union Bank closed at Rs 25.55, up 1.19 per cent, against the previous closing price of Rs 25.25 on the Bombay Stock Exchange on Friday.
By Chitranjan Kumar