UCO Bank's second hybrid issue today

Kolkata-based UCO Bank is expected to hit the market with its second innovative Tier-I perpetual debt issue tomorrow.

The size of issue would be Rs 250 crore and the bonds would carry a coupon rate of 9.35 per cent.

The public sector bank has pegged its total capital requirement for 2006-07 around Rs 1,000 crore, said a bank official.

Earlier in March, the bank raised Rs 200 crore through an issue of perpetual Tier-I instrument, thus becoming the first bank to raise hybrid capital after the Reserve Bank of India (RBI) issued guidelines for the purpose. It had raised another Rs 300 crore through upper Tier-II bonds.

Crisil has assigned AA-rating to the perpetual debt issue.

The bank's Tier-I capital adequacy was 6.1 per cent as on March 31, 2006, up from 5.75 per cent as on March 31, 2005.

The bank intends to raise fresh equity capital during the second half of 2006-07, to maintain capital adequacy well above the regulatory minimum of 9 per cent. The bank reported a profit after tax of Rs 197 crore in 2005-06 as against Rs 346 crore in 2004-05.

The government's stake in UCO Bank is 74.89 per cent, providing the bank substantial room for raising fresh equity capital.