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Wednesday, Jan 05, 2005

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Allahabad Bank to work out issue details

Our Bureau

Mr O.N.Singh, CMD, Allahabad Bank

Kolkata , Jan. 4

SHAREHOLDERS of Allahabad Bank have approved a proposal to increase the bank's capital through a public offer. The bank plans to issue fresh capital by way of book building. The size of the issue and other relevant details have not been finalised.

Allahabad Bank will reserve a significant portion of the offer for special interest groups, especially QIBs, employees and NRIs.

The issue will help increase its capital adequacy from 12 per cent to 14 per cent. Merchant bankers have not been mandated yet.

Mr O.N. Singh, CMD, said Allahabad Bank has already obtained approval from the RBI for increasing its paid-up base. Post-issue, its capital will stand increased to Rs 446.7 crore, while the Government's stake in the bank (now at 71.16 per cent) will reduce to 55.23 per cent.

The offer will enable the bank to meet its funding needs, in line with proposed expansion programmes. This will also secure its position in the context of emerging business opportunities.

The bank, it may be mentioned, is actively looking at consolidation options that will further secure its position. Nothing concrete has emerged so far.

It is, however, pointed out that all plans in this regard will probably be devised keeping in mind the bank's need to expand in the western and southern regions. A concept paper on consolidation will be placed before the board soon.

The rating agency CARE has upgraded the bank's bond rating from AA to AA+. Also, KPMG, the consulting outfit, has upgraded the bank to the seventh position (among nationalised players).

Mr Singh further mentioned that Allahabad Bank would soon send a team of officers to Kazakhstan to formalise a joint venture there with Punjab National Bank. The bank, meanwhile, is targeting a business of Rs 61,000 crore and an operating profit of Rs 1,100 crore by the end of March, 2005. It also hopes to reduce NPA to below one per cent during the same period.

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