MUMBAI: Bank of India (BoI) is raising funds in the range of Rs 1,400-1,500 crore to finance their forthcoming ventures, new initiatives and credit expansion. Disclosing this, Bank of India chairman and managing director TS Narayanasami said that based on Sebi guidelines, the floor price would be Rs 359 per share.
Bank’s key promoter, the central government, will dilute 5% of its stake in the bank from 69.47% to 64.47%. The board of BoI on Thursday cleared the proposal to raised money through sale of 3.77 crore shares to qualified institutional investors (QIIs). The actual pricing of shares will be based on the ruling price at the time the bank actually taps the capital market. The bank said that shares would be sold to public sector enterprises and mutual funds.
The extraordinary general meeting (EGM) of the bank will be held on January 23, 2008 to consider the matter. Bank’s capital adequacy ratio (CAR) stood at 12.57% as on September 2007, including tier I capital of 7.08%. Following the QIP, the tier I capital would be over 8%. The new ventures would include mutual fund tie-up with foreign partner, a joint venture for life insurance and initiatives on the credit card business.
When asked why the bank has chosen the QIP route over the rights issue, the CMD said, “The rights issue is not everybody’s prerogative. If the government were to be allowed to subscribe to every bank’s rights issue, it would widen the fiscal deficit considering that the capital requirement for Basel II was about Rs 50,000 crore.” Mr Narayanasami said that the for BoI, the impact of Basel II on its balance sheet would be about 100 basis points of its CAR.
Meanwhile, in this fiscal year, the bank has raised Rs 650 crore of the tier I capital through perpetual bond issuance and added another 734 crore to its tier II capital through revaluation of property.
Union finance minister P Chidambaram is meeting CMDs of all public sector banks (PSB) on January 4 in New Delhi. The meeting has been called for to review the half-yearly performance of state-owned banks. It may be recalled that the FM meets the chiefs of PSU banks every quarter to review their financial performance.
Bank’s key promoter, the central government, will dilute 5% of its stake in the bank from 69.47% to 64.47%. The board of BoI on Thursday cleared the proposal to raised money through sale of 3.77 crore shares to qualified institutional investors (QIIs). The actual pricing of shares will be based on the ruling price at the time the bank actually taps the capital market. The bank said that shares would be sold to public sector enterprises and mutual funds.
The extraordinary general meeting (EGM) of the bank will be held on January 23, 2008 to consider the matter. Bank’s capital adequacy ratio (CAR) stood at 12.57% as on September 2007, including tier I capital of 7.08%. Following the QIP, the tier I capital would be over 8%. The new ventures would include mutual fund tie-up with foreign partner, a joint venture for life insurance and initiatives on the credit card business.
When asked why the bank has chosen the QIP route over the rights issue, the CMD said, “The rights issue is not everybody’s prerogative. If the government were to be allowed to subscribe to every bank’s rights issue, it would widen the fiscal deficit considering that the capital requirement for Basel II was about Rs 50,000 crore.” Mr Narayanasami said that the for BoI, the impact of Basel II on its balance sheet would be about 100 basis points of its CAR.
Meanwhile, in this fiscal year, the bank has raised Rs 650 crore of the tier I capital through perpetual bond issuance and added another 734 crore to its tier II capital through revaluation of property.
Union finance minister P Chidambaram is meeting CMDs of all public sector banks (PSB) on January 4 in New Delhi. The meeting has been called for to review the half-yearly performance of state-owned banks. It may be recalled that the FM meets the chiefs of PSU banks every quarter to review their financial performance.
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