The Rs 170 crore Tier-II subordinated debt issue of Union Bank of India got fully subscribed today within two hours of its opening.
The privately placed bonds, at a coupon of 9.30 per cent, have a tenor of 65 months.
The proceeds of the issue would be utilised for augmenting the long-term resources of the bank including shoring up of capital adequacy ratio (CAR), Union Bank said in a statement.
After raising Rs 170 crore, the bank's CAR has improved to 11.08 per cent against 10.33 per cent as on September-end 2001.
The bank had raised Rs 500 crore (a Tier-II bond issue with a tenor of 84 months and a coupon of 12.50 per cent) in September 1999. Again it raised Rs 100 crore (tenor 63 months and coupon 11.25 per cent) in February 2001.
"Our advances, especially retail lending, are growing. In sync with this, the risk weight on assets has also gone up. Hence the need for more capital," said K V S Shyam Sunder, general manager of the bank.
He pointed out that the current subordinated debt issue, which had a credit rating of AA+ from Crisil, was the fourth in the series.
The bank, in the first half of the current financial year, posted a net profit of Rs 102.35 crore. It is in the process of implementing a core banking solution for networking 500 branches in the next two-three years.
The bank will also be launching shortly a cash management product for providing faster collection and payment services to corporate clients. A K Capital Services was the sole arranger for the Rs 170 crore Tier-II issue.
