Union Bank of India raises Rs500 crore via tier II bonds

Union Bank of India (UBI) has raised Rs500 crore through the issue of tier II bonds to meet its business growth requirements.

The additional capital was raised through unsecured redeemable non-convertible subordinated upper tier II bonds that have a 15 years tenure and carry a coupon rate of 8.65 per cent annually.

According to CMD K Cherian Varghese, ''As yields on government securities are coming down, we think it is the right time to raise funds through a bond issue. ''

The bank has appointed Crisil as the rating agency for the issue.

UBI executive director K Rathnakar Hegde said, ''As of the quarter ended September 30, 2004, our capital adequacy ratio stood at 12.22 per cent. However, the bank is witnessing an annualised credit growth of 27 per cent and this will bring down our CAR substantially. We aim to shore-up our CAR to comfortable levels following the issue of Tier-II bonds.''

He said the bank was not aiming to raise capital by issuing fresh equity shares.