UWB plans to raise Rs 380 cr in two years

United Western Bank (UWB) proposes to raise Rs 380 crore to shore up its equity capital and to adhere to the minimum capital requirement norms.

The old private sector bank proposes to increase the capital base in two tranches with the first tranche of Rs 255 crore to be completed during the current fiscal.

The capital base of UWB stands at Rs 29.89 crore as on December 31, 2004. The RBI guidelines on private ownership mandates banks to increase the capital base to Rs 300 crore over a three-year period.

The regulator has also stated that no single entity can hold more than 5 per cent stake in a bank. "The bank has submitted a road map to the RBI stating its plans to adhere to the guidelines," said senior banking sources.

UWB plans to raise around Rs 255 crore through a bonus-cum-rights issue followed by a preferential allotment to domestic or foreign strategic partners during the current financial year, said Satish Marathe, chairman and chief executive officer of the bank.

Key investors will participate in the rights issue, he added. At present, UWB has three major shareholder groups "" the Mumbai-based Makharias hold around 10 per cent; Sicom, the investment arm of the Maharashtra government, holds another 9.91 per cent and the bank employees' unions hold 8.14 per cent.

In addition to Rs 255 crore, Rs 125 crore would be raised in the next financial year by issuance of depository receipts or by way of preference shares subject to guidelines from the regulator, added Marathe.

The bank's shares closed at Rs 50.65 on the Bombay Stock Exchange today, reflecting a gain of 4.32 per cent as against yesterday's close of Rs 48.5.