Syndicate plans tier-II debt float

Syndicate Bank is planning to raise Rs 100 crore subordinated debt within two months to shore up its capital adequacy ratio (CAR).

The debt issue will increase its tier-II capital to Rs 350 crore from Rs 250 crore. As on September 2003, the bank had a CAR of 12.4 per cent.

"We will like to exercise a greenshoe option of retaining Rs 50 crore," Michael Bastian, chairman and managing director told reporters here.

We have decided to go for the issue keeping in view our credit expansion plans and to maintain the CAR above 12 per cent level, he explained. The bank will choose between rating agencies - Icra or Fitch, which will rate the issue.

The bank's current tier-I capital stands at Rs 1,272 crore, which includes Rs 472 crore equity and Rs 800 crore reserves.

Referring to their decision on their application to the government to return Rs 100 crore capital, Bastian said they are not likely to return the capital if the standing committee on the issue decides that the return of capital should take place at a premium.

The bank, which attained a Rs 54,500 crore total business for the period ended December, is targeting Rs 60,000 crore by end of the current financial year.

"We have grown by 24 per cent in terms of deposit mobilisation and 21 per cent in advances on a year-on-year basis," Bastian claimed.