Pubic sector lender UCO Bank will hold a 30 per cent stake in its proposed general insurance foray, likely to be operational by March 2010.
The general insurance joint venture would have an initial capital of Rs 150 crore, said S K Goel, Chairman and Managing Director, UCO Bank.
"We are in talks with a foreign partner and domestic bank or corporate house for starting the business, and an agreement will be signed by September," said Goel at a press meet on the occasion of the bank’s sixth annual general meeting here.
The shareholders of UCO Bank approved the proposal to increase the the authorised capital to Rs 3,000 crore, from Rs 1,500 crore at present.
The bank has also received its shareholders’ authorisation for a follow-on public issue, which would bring down the government’s stake to 52 per cent. "At a face value of Rs 136 crore, we expect Rs 50 premium and raise about Rs 800 crore through the issue," he said.
As part of capital restructuring, in March 2009 the bank received Rs 450 crore ,out of Rs 1,200 crore from the government as tier I capital. The bank is expected to get the remaining Rs 750 crore by next month through preferential allotment of shares. In December 2008, UCO Bank restructured the bank's equity capital by converting Rs 250 crore out of the total equity capital of Rs 799.36 crore into perpetual non-cumulative preference shares (PNCPS).
The capital restructuring led to the government stake coming down from 74.98 per cent to 63.59 per cent.