City Union Bank to raise Rs 1,100 crore
City Union Bank has reported that its board approved the fundraising plans in tune to Rs 1,100 crore via debt and equity, on Tuesday. The bank authorities also informed that it already has shareholder approval of Rs 500 crore, which it has not utilised yet.
The press release on the stock exchanges added that it will issue debt instruments such as non-convertible debentures (NCDs), which will be a part of its tier I capital (core capital and retained earnings of the bank). Along with this, it may use Tier I or II debt instruments, on a private placement basis.
At the end of FY20, the bank reported its Tier I capital adequacy ratio at 15.80 per cent, well above the regulatory requirement. These fundraising plans add additional strength to its core fundamentals. The CASA ratio at 25 per cent (Rs 1,000 crore) along with debt funds can be expected to maintain a low cost of borrowing. In addition to this, a strong capital position can also guide its credit growth. The bank also is well-provisioned to any credit loss owing to the moratorium as per RBI guidelines.
On Tuesday at 2.24 pm, the stock is trading at Rs 125.50, down by 1.8 per cent on BSE.