Allahabad Bank said it will explore the option of raising Rs 1,000 crore by September 2009 to shore up its capital to support growth. The Kolkata-based bank will use options like innovative perpetual debt instrument (IPDI), upper tier 2 and lower tier 2 bonds to this end.
We are not in a hurry to raise capital as we have a comfortable capital adequacy ratio (CAR) at 13.11%. Nevertheless, we may raise Rs 1,000 crore to take advantage of the lower interest rate regime, AllBank chairman K.R. Kamath said here on Monday on the sidelines of the bank s seventh annual general meeting (AGM).
The CMD, however, ruled out any immediate possibility of a rights issue or dilution of government stake from the current level of 55.43%. At present, public sector banks are not allowed to reduce government s stake below 51% and therefore the bank does not have a significant elbow room in this regard.
At present, public sector banks in general are not permitted to go for a rights issue. We can only consider this option once the government allows the same, Mr Kamath said.
Talking to reporters after the meeting, he said AllBank has a headroom of Rs 2,450 crore for raising capital including Rs 600 crore of tier 1 capital. Another Rs 1,850 crore can be mopped up by using bond instruments like IPDI and subordinated bonds.
At the AGM, the bank s shareholders passed a resolution by three-fourth majority to delist the Kolkata-based bank from Calcutta Stock Exchange. There is no transaction happening on the stock exchange for many years and so we are unnecessarily running compliance risk. So, we have decided to delist it from the exchange. But I am aware of the sentimental attachment to this exchange, Mr Kamath said. He however clarified that Kolkata will continue as the bank s headquarter.
Meanwhile, for the first quarter to June 30, 2009, the bank recorded a 25% year-on-year lending growth while its deposits grew 19% compared to the April-June 2008 period. The CMD conceded that the bank s margin is under pressure as the economy is passing through a low interest rate regime. However, he indicated that the bank s income from investment has been good for the quarter.
We are not in a hurry to raise capital as we have a comfortable capital adequacy ratio (CAR) at 13.11%. Nevertheless, we may raise Rs 1,000 crore to take advantage of the lower interest rate regime, AllBank chairman K.R. Kamath said here on Monday on the sidelines of the bank s seventh annual general meeting (AGM).
The CMD, however, ruled out any immediate possibility of a rights issue or dilution of government stake from the current level of 55.43%. At present, public sector banks are not allowed to reduce government s stake below 51% and therefore the bank does not have a significant elbow room in this regard.
At present, public sector banks in general are not permitted to go for a rights issue. We can only consider this option once the government allows the same, Mr Kamath said.
Talking to reporters after the meeting, he said AllBank has a headroom of Rs 2,450 crore for raising capital including Rs 600 crore of tier 1 capital. Another Rs 1,850 crore can be mopped up by using bond instruments like IPDI and subordinated bonds.
At the AGM, the bank s shareholders passed a resolution by three-fourth majority to delist the Kolkata-based bank from Calcutta Stock Exchange. There is no transaction happening on the stock exchange for many years and so we are unnecessarily running compliance risk. So, we have decided to delist it from the exchange. But I am aware of the sentimental attachment to this exchange, Mr Kamath said. He however clarified that Kolkata will continue as the bank s headquarter.
Meanwhile, for the first quarter to June 30, 2009, the bank recorded a 25% year-on-year lending growth while its deposits grew 19% compared to the April-June 2008 period. The CMD conceded that the bank s margin is under pressure as the economy is passing through a low interest rate regime. However, he indicated that the bank s income from investment has been good for the quarter.
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