Home / Markets / Stock Markets /  This PSU lender announces to raise 2,200 Cr via Tier 2 bonds

With a market valuation of 56,181.62 Cr, Union Bank of India is a large-cap public sector lender. One of the largest government banks in India, Union Bank of India, has announced plans to raise 2,200 crore through two separate tier-2 bond issues. The bond will be issued in two tranches of Rs.1500 crore and Rs.700 crore aggregating to Rs.2200 crore.

Union Bank of India has said in a stock exchange filing that “Pursuant to Regulation 30 of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, we wish to inform you that the Bank has allotted Unsecured, Subordinated, Non-Convertible, Taxable, Fully Paid-Up Basel III Compliant Tier- 2 Bonds in the nature of Debentures eligible for inclusion in Tier 2 Capital (“Bonds") in two tranches of Rs.1500 crore (ISIN: INE692A08219,Series XXXVI-A) and Rs.700 crore (ISIN: INE692A08201,Series XXXVI-B) aggregating to Rs.2200 crore on November 29, 2022."

The bank would raise Rs. 1,500 crores through bonds with a 15-year maturity and an annual coupon rate of 7.85% and Rs. 700 crores through bonds with a 10-year maturity and an annual coupon rate of 7.80%. The bonds would each have a face value of Rs. 10 lakh for both tenures. Bond the bond issues comes with ratings of CARE AA+ /Positive" by CARE Ratings Ltd and “ICRA AA+/Stable" by ICRA Ratings Ltd.

The issue size of Rs.1500 Crore comes with a base issue size of 500 Crore and a green-shoe option to retain oversubscription upto 1000 Crore, whereas the issue size of Rs.700 Crore comes with a base issue size of 200 Crore and a green-shoe option to retain oversubscription upto 500 Crore. In the quarter ended September 2022, the bank's capital adequacy ratio was 14.50%, up from 13.64% posted in Q2FY22, and 14.42% posted in Q1FY23. In Q2FY23 the bank's additional tier-I capital was worth 9,003 crore, while its tier-2 capital reached 12,700 crore. In Q2FY23, the bank's total business climbed by 17.33% year-on-year, while gross advances increased by 21.92%. As of September 30, 2022, the bank's total business reached Rs. 18,16,955 crores, comprising Rs. 10,43,265 crore of deposits and Rs. 7,73,690 crore of advances in Q2FY23.

Currently, the bank serves more than 161 million customers through a network of 8,700+ domestic branches, 11,000+ ATMs, and 16,100+ BC Points with 76,600+ employees. Today's closing price for Union Bank of India Ltd. shares was Rs. 81.60 per share, up 2.71% from yesterday's close of Rs. 79.45.

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