UBI plans to restructure its Capital, opts for tier two funds

Kolkata, Jul 24 (UNI) The Board of Directors of the United Bank of India(UBI) has finally approved the bank's long-standing proposal to approach the Centre as well as the Reserve Bank of India (RBI)for restructuring of its capital of Rs 1532.43 crores.

"The UBI Board which met here on July 19 has also allowed the bank to raise Rs 300 crores as Tier II capital within the next two weeks to part finance its future programmes", UBI Chairman and Managing Director P K Gupta announced here today.

Speaking to newsmen to announce the first quarter results of the bank, Mr Gupta said following the approval from the Board, they had decided to either request the Centre and the RBI for the reduction of its equity by Rs 1200 crores, or allow them to opt for preferential share to the tune of Rs 905 crores and the conversion of Rs 295 crores as the Innovative Perpetual Debt Instrument (IPDI)for restructuing the Bank's capital base.

"At present we are not looking for any Tier One capital since the capital adequacy ratio of the bank currently stood at a comfortable 12.38 per cent as on June 30 this year", Mr Gupta said replying to a query.

Elaborating the financial performance of the bank during April to June 2006, Mr Gupta said during the period, UBI's total business volume touched the Rs 46,304 crores mark, recording nearly 20 per cent growth compared to the corresponding period last year and keeping an eye to cross the Rs 53,500 crores on or before March 2007.

He said during the period the credit portfolios of the Bank had recorded a robust 27.52 per cent growth to Rs 16,367 crores, and the deposit by 15,60 per cent increase to Rs 29,249 crores.

The profit after tax during the first three months of the current fiscal also recorded a healthy 10.79 per cent growth to RS 70.35 Crores from Rs 63.49 crores during the corresponding period of last year, the UBI CMD said adding that this had happened primarily due to increased income from credit and for lower provision for taxes.

But on the other hand the operating profit of the Bank at the same time showed a downtrend by about 15 per cent to Rs 159.55 crores because of lower profits in trading businesses and on higher depreciations in investments, Mr Gupta explained.

About his future plans, Mr Guptra said as part of its multi crore core Banking solutions they were planning to start it with 55 selected braches this year before taking the total number of branches under CBS to at least 900 by 2009 in phases. A substantial amount had been earmarked for this purpose, he said.

Regarding his plan for agricultural credit, where the bank had the largest portfolio asmong all public sector banks in the country with an exposure of as high as 41.5 per cent by March 2006, the UBI CMD said keeping the trend we would like to increase the volume to the tune of Rs 3,000 crores from Rs 2323 crores till last year.

To a query he, however, ruled out any immediate plan to open any foreign branch or overseas office of UBI." The proposal had been kept on hold for the time being",he explained.

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