Moneycontrol Bureau
Shares of United Bank of India climbed nearly 14 percent intraday on Monday as the government will pump in Rs 800 crore by converting PNCPS to equity shares.
The board members of the bank on February 22 has approved to allot by conversion of up to 80000 perpetual non-cumulative preference shares (PNCPS) of Rs 1,00,000 each into such number of equity shares of Rs 10 each to Government of India in one or more tranches.
Moreover the board also approved issuance and allotment by conversion of PNCPS up to 11 crore equity shares of Rs 10 each on preferential basis to the President of India within March 31, 2014.
"The approvals of the board are subject to all applicable approvals/consents from various regulators and specific approval by the Central Government in this regard," the bank said in its filing.
Conversion of non-cumulative preference shares will improve the Tier I capital ratio that is stood at 5.6 percent.
Meanwhile, media report indicates that United Bank is likely to merge with Union Bank of India.
However, the bank in its clarifiation note to exchange said there is no information of the bank getting merged with any other PSU/private bank including Union Bank of India.
"The reports appearing in the media are baseless. The bank continues to focus on its resolve to reduction of non-performing assets and turnaround in the near future," the bank said.
Last week, ministry of finance accepted the application for voluntary retirement of Archana Bhargava, chairperson & managing director of the bank w.e.f. February 20, 2014.
The bank, which had reported loss of Rs 1,238 crore for the quarter ended December 2013 (against profit of Rs 42.2 crore in same quarter last year), expressed confidence in reducing at least Rs 2,000 crore non-performing assets through intensive recovery drive.
At 15:10 hours IST, the stock rose 5.34 percent to Rs 25.65 amid hefty volumes on the BSE.
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