 "UCO Bank expects revalued real estate investments at Rs 1,200 cr")
With Reserve Bank of India easing tier I capital requirement of public sector banks, UCO Bank expects an addition of close to Rs 900 crore in tier I capital, which potentially could boost its tier I capital adequacy ratio by 1%. At present, the ratio stands at around 7.69%, with the total capital adequacy ratio at around 10.54%.
Rough estimates available with the bank, suggests the valuation of the existing real estate investments of the bank is close to Rs 617 crore, according to a source in the bank. However, since the valuation was done about four to five years ago, the bank expects the worth of re-valued properties to be close to Rs 1,200 crore.
According to recent changes in Reserve Bank of India guidelines, banks can now recognise 45% of revaluation reserves to be included in Common Equity Tier 1 (CET1) capital. This apart banks are allowed to recognise 75% of its foreign currency translation reserves (FCTR) and deferred tax assets (DTAs) related to timing difference up to a maximum of 10%, as CET1 capital. Since UCO Bank does not have much FCTR and DTA, the lender is banking on its real estate investments to gain from the RBI move.
The bank has sought close to Rs 1,000 crore recapitalisation from government. The bank has so far not received any capitalisation from the government under the Indrdhanush plan. Under the plan, the government had said 13 banks would get about Rs 20,058 crore this financial year. The rest Rs 5,000 crore would be allocated based on efficiency criteria.
UCO Bank had reported a net loss of Rs 1,497 crore for the quarter ended December 2015 against a net profit of Rs 303 crore for the same period a year ago. The gross NPAs of the bank stood at 10.98% in the last quarter against 6.50% in the same period a year ago. The net NPAs stood at 6.51% in the last quarter against 4.25% in the same period a year ago.