UCO Bank to raise Rs625 crore

13 March 2008

The shareholders of the Kolkata-based, UCO Bank have authorised the bank to raise Rs625 crore by converting part of the government's equity (74.98 per cent) into preference shares and then come up with a follow-on public issue, as part of an asset expansion plan.

The bank will raise Rs325 crore by March end through perpetual non-cumulative preference shares to institutional investors and the remaining Rs300 crore would be raised later by way of an allotment to the government. 

Under the plan, the bank had proposed to convert Rs300 crore of the government's equity into preference shares.

The bank needs to augment its net owned capital to comply with Basel II norms from April this year and support business growth.

While a dividend is paid every year to preference shareholders, it does not become the first claim in perpetual non-cumulative preference shares.

The government, however, is yet to give its final approval to the proposal, which prevents the bank from entering the capital market