Vijaya Bank to consider Rs 226 cr share issue to LIC

Vijaya Bank board will consider issue of shares worth Rs 226 crore to LIC today. Speaking to CNBC-TV18, Kishore Sansi, MD & CEO of the bank says that the capital adequacy ratio (CAR) will rise to 11.5 percent post the share issue. Also, the CET 1 will also rise by 65 basis points factoring in the Reserve Bank’s new guidelines, he adds. Sansi said the bank has requested for Rs 500 crore infusion from the government. The bank is hopeful of getting it partly in FY16 and partly in next financial year, he says. The bank is trying to contain gross non-performing assets (NPAs) within 5 percent, he says adding that it will recognize Rs 148 crore of asset quality review in the on-going quarter. Below is the transcript of Kishore Sansi’s interview with Reema Tendulkar and Latha Venkatesh on CNBC-TV18.Latha: What is the capital adequacy now and with this issue of shares, what will your capital go up to?A: Currently we have a Capital to Risk weighted Assets Ratio (CRAR) of 10.65 percent as on December, 2015. So, out of that, Tier-I is 9.60 and remaining is Tier-II. So, we are planning to raise Rs 226 crore through preferential shares from LIC for which we have called a special board meeting today evening to discuss and finalise the details for the extraordinary general meeting (EGM).Latha: So, approximately how much will your total share issue go up by and therefore, what will your capital adequacy be after this issue?A: There will be increment of 1 percent. So, we are looking somewhere around 11.5 percent after the issue is with the revised LIC stake.Reema: How much relief will you get from RBI’s new norms where you can recapitalise he banks by using some of the reserve assets, etc. which came out two days ago?A: It should be close to about Rs 260 crore, so that will be another 65 basis points with our CET-IReema: So, CET on account of that will go up, that is common equity Tier-I will go up by 65 basis points?A: That is right.Latha: So, your common CET, after the LIC preferential issue, and after you revalue your reserves will stand at what, 11 percent?A: No, it should be close to 10.4-10.45 percent.Latha: Are you planning to do the revaluation anytime soon?A: Yes, within this week, we will do that.