Uco Bank plans second issue

In a bid to restructure its capital base and achieve Basel-II compliance, the Kolkata-based Uco Bank may go for a public offer during the current fiscal.

"If all goes well, we may go for a public offer during the current fiscal", said V K Dhingra, executive director.

The time and the size of the issue have not been finalised. The bank also needs the approval of the government and the Securities and Exchange Board of India.

This will be the second public offer by the bank, which had gone for its IPO in September, 2003 and raised Rs 240 crore from the market.

Post-offer, the government holding in the bank is likely to decline from 74.98 per cent to 59 to 60 percent. The bank is also planning to convert the government equity of about Rs 300 crore into preferential shares.

The bank has already raised Tier-I capital through innovative perpetual debt instruments for Rs 230 crore last year. It also issued upper Tier-II bonds for Rs 500 crore and subordinated debts for Rs 250 crore during 2006-07.

However, the bank had not made any attempt to raise Tier-I capital through public issue or preferential share issue since 2003. The urgency for going for a public issue now has come as the bank needs to be Basel-II compliant by March 2008 because it has overseas branches.

Dhingra said the policy of the bank to embark upon segmentation of its branches as flagship corporate branches, mid-corporate branches, small enterprise and retail branches has paid well. It helped to meet the credit requirement of different class of borrowers within minimum time.

While the flagship corporate branches are able to provide credit in excess of Rs.60 crore, the mid-corporate branches are able to sanction loans between Rs 3 crore and Rs 60 crore.

In another significant move to strengthen the sales marketing network, the bank recently appointed 400 retail sales executives to be deployed in 35 centres across the country, he said, adding that the bank has tied up with the Life Insurance Corporation of India for Bankassurance business.

The bank is focussing on modernisation of technology and will take up linking branches under the core banking solution (CBS) in a significant measure during this year.

"We have about 243 branches under CBS at present and will be linking 500 more branches during the current fiscal", Dhingra said.

Along with expanding network of CBS branches, the bank also plans to add 78 branches during 2007-08.

While it has obtained licences for 49 branches, the licence for the remaining branches is awaited. The bank had 1853 branches as of March2007.

Similarly, 290 more ATMs will be added in 2007-08 taking the total to 500 by March 2008. However, protecting and increasing the interest margin along with controlling the emerging non-performing assets will be the thrust area of the bank, Dhingra emphasised.

The bank is targeting a total business mix of Rs 1,34,000 crore in the current fiscal. While deposits are likely to be Rs 76,125 crore, registering a growth of 17 percent over previous year, advances are likely to be Rs 58,225 crore growing by 25 per cent over the previous fiscal.