Oriental Bank of Commerce to launch Rs1,000 crore bond issue to comply with Basel III norms
Oriental Bank of Commerce wants to raise Tier I capital through private placement of Basel III compliant additional Tier I bonds of Rs10 lakh each aggregating to Rs500 crore
New Delhi: State-owned Oriental Bank of Commerce plans to raise up to Rs1,000 crore by issuing Basel III compliant bonds on a private placement basis.
“The bank intends to raise tier I capital through private placement of Basel III compliant additional tier I bonds of Rs 10 lakh each aggregating to Rs 500 crore with an option to retain subscription of up to Rs 500 crore,” it said in a regulatory filing.
The Gurgaon-headquartered bank said the proposed bond issue has been rated A (Hyb) with negative outlook by ICRA and A with negative outlook by CARE. Banks across the globe have to mandate themselves with the Basel III standards that seeks to protect them against unfavourable economic conditions by improving and strengthening their capital planning processes.
The norms are being implemented to mitigate concerns on potential stresses on asset quality and consequential impact on performance and profitability of banks. Being implemented in phases since 1 April, 2013, India is expected to fully implement Basel III standards by March 2019. This will align full implementation of Basel III in India closer to the internationally agreed date of 1 January 2019. Share of the bank closed 5.75% up at Rs143.55 apiece on the BSE.
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