Union Bank to issue IPO early next year

The Union Bank of India will come out with an initial public offering (IPO) of about 4.5 crore shares by January next year to raise its capital asset base. The terms are likely to be finalised by the end of this year.

This would bring down the government's holding in the public sector bank from the existing 60.5 per cent to about 55 per cent, V S R Murthy, general manager, retail banking department, Union Bank of India, said.

The bank signed a memorandum of understanding (MoU) with Bajaj Auto Limited for financing two-wheelers here on Monday.

The bank has also entered into a similar tie-up with Bajaj in Madhya Pradesh and Chattisgarh and is keen to tie up in Maharashtra and Uttar Pradesh as well.

"At a reasonable target of Rs 10 crore to be achieved by the end of December, we plan to advance loans totalling about Rs 30 crore in the three states by the end of this year," Murthy said.

The present tie-up would enable the bank to advance loans not just to the salaried class or income tax assessees but also to anyone with a net income of Rs 2,500 per month, he said. The bank has entered into similar agreements under various retail segments with HCL Peripherals, TVS Motors, Ford and ICFAI.

In order to speed up its lending process and to bring all the retail products under one roof, the bank opened 33 retail marts at select centres across the country in September 2005.

Two such marts have been opened in Hyderabad and one each at Vijayawada and Visakhapatnam. "We plan to open 15 more retail marts in the first quarter of the next fiscal," Murthy said.

The bank has done a business of about Rs 280 crore in the retail segment and targets to achieve Rs 1,500 crore by the end of this financial year.

The bank's retail finance, which includes trade, home, vehicle and educational loans, stood at Rs 9,571 crore in the quarter ending September 30, 2005, and constitutes 21 per cent of its total advances.

In Andhra Pradesh, the bank has 124 branches with a business mix of Rs 4,825 crore with advances of Rs 2,715 crore, deposits of Rs 2,111 crore and a credit deposit ratio of 129 per cent.