Corp Bank to raise Rs 1,500 cr capital via Basel llI bonds in Q3

Public sector lender Corporation Bank (Corp Bank) plans to raise upto Rs 1,500 cr capital via Basel III compliant bonds in current quarter ending December 2014 to shore up the capital adequacy.

Bank has ruled out any equity offering including Qualified Institutional Placement (QIP) in current financial year. In June, bank had sought capital infusion of Rs 950 crore from the Government of India, which holds 63.33 per cent stake Stock Market Tips

The capital raising through Basel III compliant bonds has become cheaper, after Reserve Bank of India (RBI) relaxed norms for these instruments. Bank intends to raise capital in this quarter itself as there is appetite for Basel III instruments amongst long term investors, bank executive said.

Senior Corp Bank executive said the capital will be raised in one or more tranches with green shoe option, as per Basel III requirement, subject to regulatory compliances Nifty Trading Tips

On November 06, 2014 the board of directors gave nod for the raising of Tier I Bonds in the nature of Perpetual Debt Instrument to the extent of Rs1,000 crore and Tier II Bonds to the extent of Rs 500 crore.

Its CAR stood at 11.18 per cent at end of September 2014 with tier I of 7.91 per cent. Bank has set an internal target to maintain tier I level at 8 per cent.

RBI had relaxed norms after getting feedback from stakeholders especially after Bank of India had raised additional tier I capital through at high coupon rate of 11 per cent Commodity Trading Tips

The loss absorption mechanism of additional tier-I and tier-II instruments has been revised to temporary or permanent, compared to only permanent earlier. Also, rules on core equity, a significant driver of the limits of recognising AT-1 or AT-2 instruments, have been relaxed. Banks will also be allowed to include a counter-cyclical buffer and capital-conservation buffer during the period of utilisation.

Corporation bank a 936.9 per cent growth in net profit for the second quarter ended September 2014 at Rs 160.51 crore as against Rs 15.48 crore in July-September 2013 Free Share Tips