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Union Bank of India Approves Rs 10,000 Cr Capital Raising Plan

20 June 20243 mins read by Angel One
The Union Bank of India Board of Directors has approved a capital raising plan of up to Rs.10,000 crores out of which there is involvement of equity capital of Rs.6,000 crores.
Union Bank of India Approves Rs 10,000 Cr Capital Raising Plan
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Union Bank of India, commonly referred to as Union Bank, is an Indian public sector bank headquartered in Mumbai. It has 153+ million customers. After the merging with Corporation Bank and Andhra Bank, which came into effect on 1 April 2020, the merged entity became one of the largest PSU banks in terms of branch network with around 8700+ branches.It is engaged in the Business of Banking Services, Government Business, Merchant Banking, Agency Business Insurance, Mutual Funds, Wealth Management, etc.

Union Bank Fundraising 

Union Bank of India’s board of directors has approved a comprehensive capital raising plan amounting to Rs. 10,000 Crore. The plan outlines the bank’s intention to bolster its capital base to support growth initiatives and ensure regulatory compliance. Specifically, the bank aims to generate Rs. 6,000 Crore in equity capital. This will be achieved through various methods, including public issues, rights issues, and private placements. Additionally, the bank plans to raise Rs.2,000 crore through Basel III compliant Additional Tier 1 (AT1) bonds and another Rs.2,000 crore through Tier 2 bonds, pending necessary regulatory approvals. This strategic move is designed to enhance the bank’s financial stability and capacity to meet future demands, thereby positioning it for sustained growth and improved market competitiveness.

Financial Performance

In the recent March quarter, Union Bank of India’s standalone net profit rose to Rs. 3,311 crore, up from Rs. 2,782 from Q4 FY 2022-23 The core net interest income increased by 14.38%, reaching Rs. 9,437 Crore, driven by an 11.7% growth in advances and an expansion of the net interest margin to 3.10% from 2.97% in the corresponding period of the previous year.

Conclusion: The Rs. 10,000 Crore capital raising plan by Union Bank of India is a strategic initiative aimed at reinforcing the bank’s capital structure. By diversifying its funding sources through equity capital, AT1 bonds, and Tier 2 bonds, the bank is well-positioned to meet regulatory requirements, support its growth ambitions, and enhance overall financial stability.The stock of Union Bank closed at Rs.147.45 a piece.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.

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