United Bank of India plans Rs 1000-crore QIP

KOLKATA: State-run lender United Bank of India said it will raise Rs 1,000 crore in qualified institutional placement or QIP to fund overseas expansion.

The bank will soon seek regulators' clearance for the same.

UBI is also planning a rights issue after the QIP, but the management has kept the details of this under wraps.

"We need capital for expanding our overseas footprint and the money raised through QIP will be used for this," UBI chairperson and managing director Archana Bhargava said, after announcing a 80% drop in fourth quarter net profit at Rs 31 crore.

She said the fall in profit was on account of rising bad loans and thinning interest rate margin.

Banks need capital investment to get overseas branch licenses over and above the infrastructure cost.

The CMD said the UBI would seek licences to open eight to 10 overseas branches although banks' profit margin from overseas business has been thin.

However, spreading overseas footprint will open up opportunities in non fund based for the bank. There will be opportunities for UBI staff too as they can look forward for overseas posting. Banks are exploring many ways to retain staff as they fear exodus once RBI issues new banking licenses.

"We will look at virgin territories in South Africa, Mexico and the BRIC (Brazil, Russia, India and China) block," Bhargava, had said last month after assuming charge.