United Bank to submit capital revamp plan, looks to pare capital

United Bank of India will submit its proposal for capital restructuring to the Union government and the Reserve Bank of India (RBI) today.

The bank, in its proposal, has recommended the government to reduce its equity share capital by Rs 1,200 crore and simultaneously convert it to preference share capital.

"We will submit two proposals to the government and the RBI pertaining to our capital restructuring. One of them would be reduction of equity share capital by Rs 1,200 crore and its simultaneous conversion into preference share capital," said P K Gupta, chairman and managing director, United Bank.

The other option is reduction of equity share capital by Rs 1,200 crore and converting Rs 905 crore of it into preference share capital and investing the rest into innovative perpetual debt instruments (IPDI). At present, the equity base of the bank is Rs 1,532.43 crore, he added.

"We prefer the first option. This is primarily to make our initial public offering, that will be launched once the capital restructuring is complete, more attractive," added Gupta.

Meanwhile, the bank would raise Rs 300 crore of tier II capital soon, Gupta confirmed. "To support our business growth and Basel II implementation, the board has approved raising of Rs 300 crore tier II capital. We are planning to raise the capital shortly," Gupta said.

On the other hand, United Bank would roll out its pilot project of implementing core banking solution (CBS) in December 2006.

"The pilot phase of implementing CBS would be done this December, Thereafter, by March 2007, 55 branches would be CBS enabled that would be scaled up to 300 branches by March 2007 and 600 branches by March 2008," he mentioned.

The bank that had recorded 19.55 per cent growth in total business for the quarter ended at Rs 46,340 crore was targeting to end this year at around Rs 53,500 crore, he added.