Syndicate Bank to raise $125 million

Syndicate Bank is firming up plans to raise $125 million in the current fiscal through innovative perpetual bonds to boost its tier-I capital. The Manipal-headquartered bank is expected to get the board approval next month.

This issue, if the global markets cheer up, is expected to run parallel to the bank’s follow-on public issue which is also expected to hit the market by early next year. The bank, through this public offer, is expected to raise capital in the range of Rs 600-Rs 700 crore.

Syndicate Bank’s total assets is at Rs 91,000 crore which is expected to grow by 15 per cent by end of FY08. To maintain this growth momentum, it will have to raise more tier-I capital. Its capital adequacy ratio is currently at 12.62 per cent.

The decision to raise the $125 million comes just months after it recently raised $100 million from Wachovia Bank to fund its expansion plans in the European market. The bank is in the process of expanding its global presence by entering strategic global centres such as Singapore, China and Hong Kong.

At present, the government holds 66.3 per cent stake in Syndicate Bank, foreign institutional investors hold 13.3 per cent, 3.47 per cent is held by domestic institutional investors, while the rest by the general public. The bank is in the process of implementing Basel-II recommendations.