Union Bank to issue Rs 300cr tier-II bond

Union Bank is likely to tap the financial market with equity offering and Rs 300 crore tier-II bond issue to shore up capital base for supporting credit growth and meeting basel II norms.

The state-owned bank may require additional capital to create capacity for fast growing credit and meeting basel II norms, its chairman and managing director Cherian Varghese said today.

While there are no specific plans for equity offering, expanded share capital would give headroom for raising tier-II base through bonds, he said.

Bank's executive director K Ratnakar Hegde said the government holds 61 per cent stake in the public sector bank and hence, there was room to expand capital without risk of dilution of the centre's stake below 51%.

The option of global depository receipt looked difficult as foreign institutional investors' stake has already touched 20 per cent ceiling, Hegde said.

The bank could look at securitising part of the loan portfolio to release some capital for extending credit. It may also float tier-II bonds upto Rs 300 crore in the current fiscal, he added.