ING Vysya Bank's board approved on Wednesday a 3:1 rights issue (three equity shares for each share held). Factoring in the Rs 35 premium, the issue will be priced at Rs 45.The funds raised through this issue will be used to beef up its Tier-I capital by about Rs 300 crore.Earlier in October, Bart Hellemans, managing director and chief executive officer, ING Vysya Bank had said the management was mulling options to raise Tier-I capital.Then, the bank was constrained by a Reserve Bank of India (RBI) draft note that had hinted at restricting foreign shareholding in Indian banks.As on September 30, 2004, foreign shareholding in ING Vysya Bank tood at 73.09 per cent of the total share capital, with the foreign promoters alone controlling 43.9 per cent.However, the bank sought clarifications from RBI and had proceeded with the rights issue based on the feedback. In fact, the bank had said that in the event of a rights issue the shareholding pattern may skew further towards the foreign promoters. It was in this background that the bank had sought RBI clearance.The capital infusion is expected to stem the losses that the bank has been suffering. For the half-year ended September 30, 2004, reported a net loss of Rs 49.24 crore as against a profit of Rs 58 crore during the same period last fiscal. This was due to a Rs 130 crore loss from treasury operations.
