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M. Ramesh

CHENNAI, March 27

WHAT is common between Canara Bank, Union Bank, IDBI Bank and the UTI Bank (other than the fact that they are all banks, of course)? Well, they all want to come out with a public issue next year.

Presumably, there are many other banks, which too want to raise capital from the market. To all of them, the Punjab National Bank's IPO, which is on right now, is the benchmark.

Initial reports suggest that the issue is a success. According to various sources, the issue is already subscribed thrice over, and there is one more day to go. But the key point is, at what price will the scrip open with.

The past does not appear to be a good indicator here.

In 2000, the Indian Overseas Bank and the Vijaya Bank `at par' issues hit the market. These issues were oversubscribed 1.9 times and 1.81 times respectively.

The IOB scrip made its debut on the stock exchange on December 11, 2000 at a price of Rs 11.85, but ended up at Rs 10.40 at close. The Vijaya Bank scrip opened on January 9, 2001, at Rs 10.45 but closed below par, at Rs 9.

A few months later, the Andhra Bank's par issue for Rs 150 crore also came to be fully subscribed. This scrip ended its first day on the bourses below par, at Rs 9. A `close below par' was also the fate of the Syndicate Bank share in March 2000.

On the other hand, there have been some successful issues too. Corporation Bank's Rs 304-crore issue in December 1997, was subscribed 13.5 times over. The issue was made at a price of Rs 80. It ended its first day at Rs 86.

In December 1996, Bank of Baroda came out with a biggish issue of Rs 850 crore, offering its shares at a price of Rs 85. On February 27, the bank's shares called it a day at Rs 79.50.

What will PNB's shares do? Bank officials had earlier expressed confidence that, given the relative strength of the bank and the relatively lower premium (of Rs 21), the bank's issue would "create history". And so far, so good - the issue appears to be going on track.

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