Syndicate plans second follow-on issue

Syndicate Bank is planning to hit the capital market with follow-on public offer of eight crore equity shares (face value Rs 10 each). It will use proceeds of the issue to shore up the capital for credit growth and comply with Basel II norms by March 2008.

The State Bank of India, ICICI Bank (Rs 20,000 crore), HDFC Bank (Rs 4,200 crore) and Federal Bank have already announced plans to raise capital from the equity offering.

The bank needs capital to support credit growth. Also, since bank has a branch in London , it will have to be meet with Basel II norms by end of this financial year (March 2008), its Chairman and Managing Director C P Swarnakar said.

The board today gave its nod to start the follow-on issue process.

The offer is subject to approval from the government of India (which holds 66.47 per cent stake), Reserve Bank of India and other statutory bodies.

The price of the offer will be decided later, he said. He, however, did not comment on the timing of the issue.

The Syndicate Bank stock closed higher at Rs 81.35 on Bombay Stock Exchange (BSE) today as against previous close of Rs 81.15. With the present price level, bank can raise close to Rs 650 crore through the offer, analyst said.

The bank's capital adequacy as on March 31 stood at 11.74 per cent. Its paid-up capital was Rs 521.97 crore.

The public sector bank's global advances as on March 31, increased by 40.31 per cent to Rs 52,839 crore from Rs 37,660 crore a year ago.