Union Bank plans second follow-on issue of shares

Union Bank of India, the public sector bank based in Mumbai, is likely to come up with a second follow on equity issue, reports MC Vaijayanthi.

Union Bank of India, the public sector bank based in Mumbai, is likely to come up with a second follow on equity issue, say informed sources. Currently, the government owns 55 per cent of shares in Union Bank.

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“The bank has room to issue six to seven per cent of its equity so that the government is able to maintain a controlling (post-issue) stake of 51 per cent,” said a source.

Union Bank's stock was the top gainer on Monday as it soared more than 11 per cent to Rs 145, with large volumes changing hands. The capital adequacy ratio of the bank currently stands at 12.8 per cent with a Tier I ratio of 7.79 per cent.

Union Bank said in May that the bank had enough headroom to raise about Rs 1,500 crore of hybrid bonds and will not go in for equity dilution to raise capital.