Union Bank to merge three UP rural banks

Union Bank of India will be merging three regional rural banks (RRBs) in Uttar Pradesh into one unit, to be called Kashi Gomti Samyukt Gramin Bank.

Addressing a press conference K Cherian Varghese, chairman and managing director, said the amalgamated RRBs would have deposits of Rs 2,139 crore and advances Rs 646 crore and will be based in Varnasi.

According to the notification of government of India on September 12, Kashi Gramin Bank, Gomti Gramin Bank and Samyukt Gramin Bank would be merged.

The bank has one RRB in Madhya Pradesh, but owing to geographical difficulties the RRB has been left untouched. Union Bank's second public issue of 4.50 crore shares is expected to hit the market in three months, he said.

An application has been filed with the government for permission and issue will be through book-building. Post issue, the government's holding will come down from 60.85 per cent to 55.45 per cent.

Cherian said the bank would also be raising Rs 800 crore tier-II shortly. The objective behind raising funds is to have maintain a cushion of 3 per cent capital adequacy ratio above the mandatory requirement and to meet Basel-II norms, he added.

The bank's CAR was 12 per cent at the end of June 2005 and with the implementation of Basel-II norms, 1.25 per cent of it is expected to be knocked off, he said.

Cherian said the bank's core banking solutions will be extended to 1,250 branches from 654 branches by year-end. The bank has over 2,000 branches and would add another 100 branches this year. Cherain said with the implementation of core banking solutions, the surplus staff would be re-deployed into marketing and recovery of bad loans.