Debabrata Sarkar, CMD of Union Bank of India said they are looking to raise perpetual bonds worth Rs 1500 crore. Taking into consideration the Basel III committee recommendations, a mix of tier II bonds along with perpetual bonds may help them raise capital in the December quarter itself
Around Rs 300 to 400 crore will be raised via Tier I capital perpetual bond, in accordance with the appetite of the market
Debabrata Sarkar, CMD of Union Bank of India said they are looking to raise Rs 1500 crore through perpetual bonds. Taking into consideration the Basel III committee recommendations, a mix of tier II bonds along with perpetual bonds may help them raise capital in the December quarter itself, he believes.
Here is the edited transcript of the interview on CNBC-TV18.
Q: What is your capital adequacy now, what is the Tier one and what would you like it to be in this fiscal year?
A: As far as my current capital is concerned, till September the total capital adequacy ratio was 11.39 percent and tier one was 8.17 percent while tier two was at 3.22 percent.
Q: At the end of the third quarter all this would have been trimmed by about 0.5 percent you think given the credit growth?
A: Last Saturday we had a board meeting and we took the authority's mandate for Rs 1500 crore, both in Tier II as well as in case of perpetual bonds. We are checking the present growth so that we can look into the credit growth.
Q: You all are looking to raise about Rs 1500 crore of bonds. So could you walk us through what that will do?
A: From January 1, 2013 Basel III committee recommendations will be implemented. So keeping these in mind, we thought that perpetual bonds can go for Rs 1500 crore with a mix of tier II bonds as well as perpetual bonds so that we can raise a little bit in this December quarter itself.
Q: You are going to raise Rs 1500 crore only through perpetual bond?
A: Perpetual as well as through a tier II mix, considering the appetite of the market.
Q: So what will be the Tier I part of the perpetual bond of this Rs 1500 crore?
A: At this moment, we think out of this Rs 1500 crore, around Rs 300 to 400 crore will be raised via Tier I capital perpetual bond, in accordance with the appetite of the market and the rest will be raised by Tier II considering the absorption capacity of the market.
Union Bank stock price
On August 21, 2014, Union Bank of India closed at Rs 212.75, up Rs 14.85, or 7.50 percent. The 52-week high of the share was Rs 259.60 and the 52-week low was Rs 97.10.
The company's trailing 12-month (TTM) EPS was at Rs 28.56 per share as per the quarter ended June 2014. The stock's price-to-earnings (P/E) ratio was 7.45. The latest book value of the company is Rs 291.36 per share. At current value, the price-to-book value of the company is 0.73.
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