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Syndicate Bank to raise Rs 3,500 crore

The bank plans to raise Rs 1,500 crore of tier-I capital and Rs 2,000 crore of tier-II subordinated debt, chairman MG Sanghvi said.

, ET Bureau|
Updated: Jan 24, 2013, 11.58 AM IST
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The bank plans to raise Rs 1,500 crore of tier-I capital and Rs 2,000 crore of tier-II subordinated debt, chairman and managing director MG Sanghvi said.
The bank plans to raise Rs 1,500 crore of tier-I capital and Rs 2,000 crore of tier-II subordinated debt, chairman and managing director MG Sanghvi said.
HYDERABAD: Mid-sized state-run Syndicate Bank, which raised Rs 1,000 crore of tier-II bonds and $500 million (about Rs 2,680 crore) of overseas bonds in October 2012, obtained board approvals on Wednesday to raise another Rs 3,500 crore of capital.

The bank plans to raise Rs 1,500 crore of tier-I capital and Rs 2,000 crore of tier-II subordinated debt, chairman and managing director MG Sanghvi said.

Addressing the media in Hyderabad after the board took on record the audited financial results for the December 2012 quarter, Sanghvi said the bank may consider raising Rs 1,500 crore tier-I capital before March to shore up its capital adequacy ratio (CAR).

He said the bank has entered the league of large banks with its total businesses surpassing Rs 3 lakh crore.

Syndicate Bank expects its credit portfolio to grow by about 18 per cent this fiscal and by at least 20 per cent in the next fiscal, driving the need to further strengthen CAR, which currently is at 10.29 per cent as per Basel-I and 11.38 per cent as per Basel-II.

The bank expects the CAR to improve by about 80 bps with every Rs 1,000 crore of additional capital, said Sanghvi.

He said the board has also approved a proposal to raise $1,000 million (about Rs 5,200 crore) from overseas bonds through the mediumterm note (MTN) programme.

"We will look at raising these overseas bonds sometime next fiscal based on the growth in our overseas business." Executive director M Anjaneya Prasad said the bank’s overseas business saw significant growth of over 50 per cent to Rs 33,654 crore for the period ended December 2012.

For the December 2012 quarter, the bank reported a growth of 17 per cent in advances at Rs 1.36 lakh crore and 15 per cent in deposits at Rs 1.64 lakh crore over the same quarter a year ago.

However, owing to high interest costs on deposits in general and bulk deposits in particular that led to cost of funds going up by 26 basis points to 6.92 per cent, the bank suffered a marginal fall of 5 basis points in net interest margin at 3.28 per cent.

Sanghvi said the bank would focus on improving the feebased income through distribution of third-party products. The bank will also strive to improve the cheaper current and savings account (CASA) deposits by at least 50 bps this fiscal.
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