BoB defers float over North Block clearance delay

Bank of Baroda (BoB) has postponed its second public issue, slated to raise over Rs 1,500 crore, to the first quarter of 2005-06 against its earlier plan of January-February 2005.

The bank had to defer the float as it is still awaiting clearance from the finance ministry. "Even if we get the permission now, there is not much time left to conclude the issue before March 2005," chairman P S Shenoy said.

The bank is seeking to issue 9.1 crore equity shares. After the proposed issue, government holding will fall to 51 per cent from 66.83 per cent and the paid-up capital will rise to Rs 385.53 crore from Rs 294.53 crore. The bank had reserves of Rs 4,587.13 crore as on September 30, 2004.

The bank is seeking to raise capital to meet additional needs that will arise on implementation of the Basel II norms for operational and market risks.

BoB's higher capital adequacy will also take care of its expansion. At the end of September 2004, the babnk's capital adequacy ratio was 13.97 per cent.

The premium to be charged on the face value of Rs 10 will be decided at the time of hitting the market. The bank's book value per share as at end-March 2004 was 166.46. The bank's share closed on Thursday on the National Stock Exchange at Rs 219.

A slew of public sector banks"" Punjab National Bank, Dena Bank, Allahabad Bank, Indian Bank and Syndicate Bank - are planning to tap the new issue market.

The Reserve Bank of India has set up an experts committee to implement Basel II accord by 2006 to strengthen the financial health of banks by adopting globally accepted norms for capital adequacy. The Basel II accord offers a new set of standards for minimum capital requirements for banking operations - capital adequacy, supervisory review and market discipline.