Shares of Union Bank of India jumped 5 per cent in Wednesday’s trade after the state-owned bank said it will raise Rs 1,000 crore from bonds to fund business growth.
“The bank is issuing Basel-III compliant Tier II bonds like debentures aggregate issue size not exceeding Rs 1,000 crore, with a base issue size of up to Rs 500 crore and a Green Shoe option to retain oversubscription up to Rs 500 crore,” it said in a BSE filing.
The stock rose 5.05 per cent to hit a high of Rs 27 on BSE. Despite this, the script is ruling just 4 per cent above March’s low levels.
The bonds of the face value of Rs 10 lakh each, bearing a coupon of 7.18 per cent per annum will have a maturity of 15 years, it said. The bonds have a fixed allotment date of November 26, 2020.
The Basel-III capital regulations are globally accepted banking norms under which banks need to improve and strengthen their capital planning processes.
Basel-III norms are being implemented in phases since 2013 by Indian banks to mitigate concerns on potential stress on asset quality and consequential impact on performance and profitability of banks.
Face value or the issue price of the bond is Rs 10 lakh per bond, with a coupon rate of 7.18 per cent per annum.
The state-owned bank reported a 55.3 per cent jump in its net profit at Rs 517 crore in the second quarter ended September.