BoB to float 9.1 crore shares in January

Bank plans to raise Rs 1500 crore

Bank of Baroda (BoB) has announced its second public offer of 9.1 crore equity shares in January 2005 to raise around Rs 1,500 crore.

"The bank board has approved an offering of 9.1 crore shares of Rs 10 face value and we have approached the government and Reserve Bank of India for their approvals. We hope to visit the market in January or February next year," P S Shenoy, BoB chairman and managing director said at press conference called by its subsidiary, BobCards here yesterday.

The exact premium per share he said would depend on the market conditions. "The bank wants to get ready for meeting the Basel II norms for operational and market risks, and business expansion," said Shenoy. The public sector bank wants to have a sufficient cushion for capital adequacy post Basel II guidelines when they become operational, the CMD added.

Currently, the capital adequacy ratio was 13.97 per cent and with the market and operational risks in place, it could come down to 10.5 per cent.

Post offer, the government's stake in the bank would come down to 51 per cent. The public offer would help the bank to shore up its capital adequacy ratio further, he said adding BoB has no plans to raise the tier II capital (by issuing bonds).

The bank's share gained Rs 7.25 to Rs 196.25 on the Bombay Stock Exchange yesterday.

Meantime, Punjab National Bank is also gearing up to issue up to 5 crore shares through a public offer, while Dena Bank will offer 8 crore shares and Bank of India is planning a 10 crore share issue.

Others in the float pipeline are Allahabad Bank, Indian Bank and Syndicate Bank. All banks are readying to raise capital in order to meet the increased capital requirements prescribed by Basel II norms that are to be complied with by December 2006. Increased credit offtake is yet another reason for all these issuances.