The Hindu Business Line : Vijaya Bank to raise Rs 700-cr tier-II capital

Left with hardly any headroom for raising tier-I capital for augmenting the capital adequacy ratio (CAR), the Mangalore-based public sector bank, Vijaya Bank has decided to mop up around Rs 700 crore under upper, tier-II capital before the year-end, its Chairman and Managing Director, Mr Prakash P. Mallya, said.

Despite mobilising Rs 250 crore under lower tier-II capital at a coupon rate of 9.25 per cent recently, the bank still finds it difficult to maintain its CAR at around 11.5 per cent to meet the requirements under the Basel-II regime from next fiscal, Mr Mallya told newspersons here.

With the proposed Rs 700-crore upper tier-II issue, the bank expects to comfortably have a CAR of over 11.5 per cent even under the Basel-II regime. The bank's current CAR stands at 11.55 per cent, which is likely to fall by 100-200 basis points on account of Basel-II norms.

Vijaya Bank, which expects to cross Rs 50,000-crore mark in business by September 29, is confident of posting a net profit of at least Rs 300 crore for the current fiscal.

"We may even declare an interim dividend for the current fiscal immediately after taking on record the financial results for the second quarter of the fiscal, of course, subject to the board's approval," he said.

Overseas branches

Mr Mallya said the bank planned to open overseas branches at Hong Kong, China and Dubai and was awaiting the RBI nod. The bank had initially set a target of crossing 1,000 branches network by the current fiscal end and submitted applications to the RBI for opening 143 branches. With the delay in obtaining the necessary approvals till date, the bank now expects to reach a size of at least 950 branches by fiscal end from the current level of 925 branches.

Vijaya Bank has emerged the second largest bank in terms of branches in the northeast with 22 branches and a business size of Rs 1,700 crore. The bank currently has a credit-deposit (CD) ratio of 32 in this region as against the national average CD ratio of 62. "We are taking steps to improve the CD ratio in the northeast region significantly," Mr Mallya said.

More Stories on : Public Sector Banks | Outlook

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
RBI fiat to banks opens biz window for vendors

Oil prices, insurers support bonds

Vijaya Bank to raise Rs 700-cr tier-II capital

Canara Bank loans for BSNL staff

Banking industry for consolidation

Talk by banking Ombudsman (Karnataka) today

UFBU warns of countrywide bank strike

Bank union plans strike on Oct 27

GIC aims to be lead reinsurer in Afro-Asia