Uco Bank in final laps of hiring merchant bankers to raise Rs 1,000 cr via share sale

Uco Bank in final laps of hiring merchant bankers to raise Rs 1,000 cr via share sale

Kolkata: State-owned Uco Bank is in final laps of hiring merchant bankers for raising about Rs 1000 crore in share sales, while its appeal to Life Insurance Corporation of India for capital injection on preferential basis has failed to elicit response so far.

Uco chief executive AK Goel on Monday said the bank has approached LIC again and that the Corporation would “take a call” on capital infusion. The Kolkata-based lender has been in talks with the country’s largest insurer for the last couple of years.

LIC holds 2.23% in Uco while it can raise its holding up to 15%. The government holds 94.44%.

Meanwhile, Goel said that the process of hiring merchant bankers is in the final stages. The selection has already been done.

The bank, which reported Rs 35 crore net profit for the December quarter against a Rs 960 crore loss in the year ago period, would most likely hit the equity market after the March quarter.

Goel said the bank has sufficient capital for this quarter with capital adequacy of 12.08% as against the requirement of 10.875%.

The lender has board approval for raising up to Rs 3,000 crore in combination of equity and bonds.

Uco’s operating profit rose about 10% at Rs 1334 crore in the December quarter against Rs 1211 crore in the year ago period. Its provision fell to Rs 1299 crore against Rs 2171 crore over the same period. Gross non-performing assets ratio improved 9.8% against 19.5% while net NPA was at 2.97% against 6.34%.

“The effect of pandemic is likely to be felt in the March quarter,” Goel said, adding that the bank has made 15% provision against the stipulated 10% on the stressed accounts.

Banks did not classify borrower accounts as NPA following an order by the Supreme Court, which told banks to holdback classification of assets, which were not NPA till August.

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