Uco Bank plans Rs 250 cr issue

Public sector Uco Bank is planning a follow-on public offer (FPO) of shares to raise Rs 200-250 crore in the first half of the calendar year 2008 to fund asset expansion.

"The bank also has plans to raise Rs 200 crore in tier-II bonds by March-end 2008," Uco Bank Chairman and Managing Director S K Goel said today.

Uco Bank has submitted a capital restructuring plan to the government. It has suggested for a conversion of Rs 300 crore worth equity shares into preference shares and the bank expects to get the government's nod in 45 days. At the moment, the bank has a paid-up capital of Rs 800 crore.

"After the capital restructuring, we will go for a follow-on public issue to raise Rs 200-250 crore either in the last quarter of 2007-08 or the first quarter of 2008-09," Goel said.

The share sale would dilute the government's holding to 55 per cent from the present 75 per cent, he added.

The bank expects a loan growth of 20 per cent to Rs 52,000 crore by March 2008 and sees deposits growing by 20 per cent to Rs 80,000 crore during the same period.

Uco Bank shares today closed at Rs 39.15, 9.38 per cent lower than the previous closing of Rs 43.20 on the Bombay Stock Exchange.

On interest rates, Goel said the country's largest bank, State Bank of India, should take the lead in cutting deposit rates. "SBI should take the lead in cutting interest rates on deposits, other banks will follow," he said.

The deposit rate cut would enable banks to lower lending rates, he added. Commenting on the upcoming monetary policy review, he said the central bank was unlikely to raise the cash reserve ratio.