Union Bank mulls rights issue

“We would be making the plans for the next financial year in February, and if we find there is a need for capital, we may look at a rights issue as an option,” Mr M.V. Nair, Chairman and Managing Director of Union Bank of India, told. The Government currently holds 55.43 per cent stake in the bank, with public institutions including mutual funds, financial institutions and banks, insurance companies and foreign institutional investors (FIIs) having 31.1 per cent stake. Union Bank, on Thursday, also raised a debt of Rs 600 crore, which includes Rs 200 crore in perpetual debt and Rs 400 crore in Tier-II bonds. The bank is targeting a total business of Rs 1,85,000 crore of which Rs 1,05,000 crore would be from deposits and Rs 80,000 crore from advances. Currently, the total business is at Rs 1,65,000 crore. Mr Nair also said that the capital adequacy ratio of the bank after the introduction of Basel II norms in April next year will be 11.5 per cent. “The net interest margin (NIM) of the bank is also expected to dip marginally to around 3 per cent for the current fiscal from 3.05 per cent last year.” he said.