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Key Points

Union Bank of India plans to raise Rs 6,000 crore through a mix of equity and debt instruments. The bank will seek shareholder approval for Rs 3,000 crore in equity via FPO, QIP, or rights issue. The remaining Rs 3,000 crore will be raised through Basel III-compliant AT1 and Tier 2 bonds. In a separate development, the government revoked Pankaj Dwivedi’s appointment as Executive Director.

Key Points: Union Bank of India Plans Rs 6,000 Crore Fundraise via Equity and Debt

  • Board approves Rs 3,000 crore equity raise via FPO/QIP/rights issue
  • Rs 3,000 crore debt includes Basel III AT1 and Tier 2 bonds
  • Shares fell 1.8% but gained 21% in six months
  • Government cancels Pankaj Dwivedi’s ED appointment
2 min read

Union Bank of India to raise Rs 6,000 crore via equity, debt instruments

Union Bank of India approves Rs 6,000 crore capital raise through equity and debt instruments including AT1 and Tier 2 bonds.

"The Central Government has cancelled the appointment of Pankaj Dwivedi as Executive Director of Union Bank of India. – Union Bank of India"

New Delhi, June 25

Public sector lender Union Bank of India on Wednesday announced plans to raise up to Rs 6,000 crore through a mix of equity and debt instruments.

The decision was approved by the bank’s board on Wednesday and was announced after market hours.

Out of the total fundraise, the bank will raise up to Rs 3,000 crore through equity instruments.

This could include a Further Public Offer (FPO), rights issue, Qualified Institutional Placement (QIP), or a combination of these options.

However, the equity raising plan is still subject to approval from the shareholders. The remaining Rs 3,000 crore will be raised through debt instruments.

This includes up to Rs 2,000 crore via Basel III-compliant Additional Tier 1 (AT1) Bonds and up to Rs 1,000 crore through Tier 2 Bonds.

On Wednesday, Union Bank of India’s shares fell 1.8 per cent and closed at Rs 144.40 apiece on the Bombay Stock Exchange (BSE).

Despite the drop, the stock has gained nearly 3 per cent in the past one month and over 21 per cent in the past six months.

Over the last five years, the bank’s shares have seen a significant rise of more than 327 per cent. The stock currently trades at a price-to-earnings (P/E) ratio of 6.76.

In a separate development, the bank earlier this week informed that the Central government has cancelled the appointment of Pankaj Dwivedi as Executive Director of Union Bank.

He has immediately ceased to hold the position. The government had approved Dwivedi’s appointment in March last year for a three-year term.

“We wish to inform you that the Central Government … has cancelled the appointment of Pankaj Dwivedi as Executive Director of Union Bank of India and consequently he ceases to be the Executive Director of the Bank with immediate effect,” the public lender informed the exchanges on Monday.

He has now returned to his previous role as General Manager at Punjab & Sind Bank.

- IANS

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Reader Comments

R
Rajesh K.
Good move by Union Bank! Public sector banks need capital to compete with private players. The 327% growth in 5 years shows they're on right track. Hope they use these funds to improve digital banking services. 🇮🇳
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Priya M.
As a small investor, I'm concerned about the sudden cancellation of ED appointment. What's the real story behind Pankaj Dwivedi's removal? Transparency matters in PSU banks. Otherwise, good fundamentals shown by the stock performance.
A
Amit S.
Mixed feelings about this. While capital infusion is needed, why always equity dilution? Common shareholders suffer. They should focus more on debt instruments. PSU banks need to protect small investors like us.
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Sunita R.
Union Bank is my salary account bank. Their service has improved significantly in last 2 years. Hope they use this money to expand rural branches too. Many villages still lack proper banking facilities. 🏦
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Vikram J.
The AT1 bonds could be attractive for conservative investors. But recent Yes Bank AT1 bond write-off still makes me nervous. RBI should ensure proper safeguards before banks raise money through such instruments.
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Neha T.
PSU bank stocks have been performing well lately. Union Bank's 21% gain in 6 months is decent. Might consider buying more in the dip. But the management changes raise some red flags - hope it doesn't affect operations.

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