Union Bank fixes price band at Rs 100-Rs 110 per share

Union Bank of India has announced the price band for its follow-on public issue at between Rs 100 and Rs 110. The issue will open on 15 February and would close on 21 February. The minimum bid lot is 50 shares and thereafter in multiples of 50 shares.

Union Bank is issuing 4.5 crore shares of Rs 10 each through the public offer. The bank would raise Rs 450 crore at the lower end of the price band and Rs 495 crore at the upper end.

Many banks are coming out with public issues to shoe up their capital base. As the economy is growing at a healthy pace credit demand is growing steadily, both in corporate as well as retail segments. Banks are raising capital to meet this credit demand.

Banks also need to shore up their capital base to meet the capital adequacy norms prescribed under Basel II norms which will come into force by the middle of next calendar year.

Union Bank reported a net profit of Rs 229.08 crore or Rs 4.98 per share for the December quarter as compared to Rs 59.07 crore during the previous year quarter. Total income increased to Rs 1,652.5 crore from Rs 1,480.18 crore. Profits were substantially higher because of a sharp decline in provisions during the current year quarter.

For the quarter ended September 2005, Union Bank had reported a net profit of Rs 61.1 crore or Rs 1.33 per share on total income of Rs 1,560.44 crore.