Allahabad Bank's second public issue gets consent of the Shareholders

The shareholders of Allahabad Bank in an Extraordinary General Meeting held on date in Kolkata gave their consent to Allahabad Bank to increase its share capital by 10 crore equity shares with aggregate face value of Rs. 100 crore. The Bank will decide the size, structure, and timing of the issue by way of book building process in consultation with the Lead managers/Book Running Lead Managers and other Advisors to the issue.

Speaking on the occasion, Shri O.N. Singh, Chairman & managing Director of Allahabad Bank stated that the Bank has obtained the requisite approvals from the Reserve Bank of India and Government of India for increasing the paid up capital of the Bank. Consequent upon the completion of the aforesaid public issue the issued capital of the Bank would stand increased to Rs. 446.70 crore and the Govt.'s stake in the Bank will come down to 55.23% from existing 71.16%. The new equity shares to be issued as per this proposal will rank pari passu in all respects with the existing equity shares of the Bank including dividend, if any, declared by the Bank after the allotment of the equity shares arising out of the public issue.

Continuing on the subject, Shri Singh stated that the Bank has opted for the Book Building route instead of Fixed Price route for a better price discovery as well as greater participation from the Qualified Institutional Investors. There would be reservations on Firm and/or competitive basis for eligible NRIs, Qualified Institutional Buyers (QIBs), Institutions, Existing Shareholders, Banks, FIIs and employees of the Bank.

Elaborating further, Shri O.N. Singh said that the present issue is being floated with a view to augment resources of the Bank to meet the funding needs commensurate with its projected expansion plans and to enable the Bank to further strengthen its capital for Basel II Capital Accord Compliance and to ideally position the Bank to capitalise on the emerging business opportunities. With increased Capital Adequacy, Shri Singh continued, the Bank could now expand its asset base in a planned manner and attain the critical mass necessary to make its Balance Sheet self-sustaining. In other words, there may not be a requirement of visiting the capital market in the near horizon as the internal generation and ploughing back of profits shall be sufficient to sustain the future expansion plans of the Bank.

Shri Singh stated that the improved performance of the Bank in recent past has increased market confidence and customers' & shareholders' value and the Bank has emerged as growing and dynamic Bank with an enhanced image and improved visibility. In this connection, he was happy to share that besides CARE which has improved the Bond rating of Allahabad Bank from AA to AA+, some recent business publications and research houses have re-rated Allahabad Bank. For instance, one of the leading business dailies has upgraded the overall rank of Allahabad Bank from 43 to 4 amongst 57 Indian Banks while another leading business daily in its analysis of top 500 Indian companies has ranked Allahabad Bank at 113 as compared to 136 in the previous year. Amongst the 19 Nationalised Banks it has placed the growth in market capitalisation as the highest for Allahabad Bank. Similarly, in a survey conducted by KPMG on the Best Banks in the country, Allahabad Bank has been upgraded to the 7th position among the Nationalised Banks. In a nutshell, Shri Singh summarised that the areas in which the inherent strength of the Bank has been acknowledged are basically Productivity, Profitability, Growth and Asset Quality.

Shri Singh also informed that Allahabad Bank is deputing a team of Officers to Kazakhstan shortly to formalise the joint venture with the Punjab National Bank.

Talking about the future targets, Shri Singh said that Allahabad Bank is committed to reach a business level of Rs. 61000 crore and Operating Profit of Rs. 1100 crore by the end of March 2005 and to bring down the NPA to below 1% during the same period. Allahabad Bank has met its business target during the first two quarters in the current financial year and is on course to meet the target set for itself for the remaining quarters, concluded Shri Singh.