Syndicate Bank to raise Rs 5,550 cr equity, debt capital

State-owned Syndicate Bank on Tuesday said it will raise up to Rs 5,550 crore from a mix of equity and bond to meet its capital requirements.

The board at its meeting on Tuesday has approved raising of equity capital of Rs 2,000 crore by way of Qualified Institutional Placement (QIP) or rights issue or Follow on Public Offer or any other mode approved by the RBI or Government, the bank said in a filing on the BSE.

Besides, the board has also approved raising of up to Rs 1,800 crore by issuing Basel III Complaint Additional Tier (AT) I bonds. At the same time, it has proposed to raise up to Rs 1,750 crore from Tier II bonds.

Taking together, Syndicate Bank would be raising up to Rs 5,550 crore from equity and bonds. The issuance of shares and bonds would come at an appropriate time, it said. Under the Basel-III norms, AT-1 bonds come with loss absorbency features, meaning that in case of stress, banks can write off such investments or convert them into common equity if approved by the RBI.

AT-1 bonds, which qualify as core or equity capital, are one of the means of raising capital by public sector banks that require Rs 2.40 lakh crore by March 2019 to meet global norms on capital adequacy (Basel III).

This is the first board meeting after Arun Shrivastava took charge as Managing Director and Chief Executive Officer of Syndicate Bank last week. Last fiscal, the government infused Rs 460 crore in the bank to shore up its capital base.

Shares of the bank closed at Rs 109.15 per unit, up 0.18 per cent on the BSE.