Synd Bank plans to raise Rs 4.5k cr

Manipal-based public sector lender Syndicate Bank is planning to raise additional capital amounting to almost Rs 4,500 crore by the end of the fiscal year 2017-18. The allocation of the new capital to be raised has been divided across the tiers. The bank intends to raise Rs 2,500 crore as Common Equity Tier 1 (CET1) Capital. The bank also plans to raise Rs 1,000 crore each of Additional Tier 1 (AT1) and Tier 2 capital. Out of Rs 2,000 crore allocated for AT1 and Tier 2 capital, the bank has already raised Rs 450 crore of the AT1 capital and Rs 500 crore of the Tier 2 capital. “We have not yet decided about when we are going to raise the capital. It all depends as to when market conditions are condusive,” Melwyn Rego, MD and CEO told reporters.

He said the bank has written to the government as well for the infusion of capital and is quite hopeful on that front. Rego also highlighted the problems faced by the banks. “The challenges that banks face include slowdown in fresh corporate advances, pile up of bad loans in banks, rate war among banks, and deepened asset quality woes,” he said.

The company has also set in motion three-pronged stragegy for the transformation of the bank, focussing non-performing asset (NPA) management, increasing Current Account - Savings Account (CASA) percentage and focus on the retail portfolio (with emphasis on home loans and mortgage loans). The bank expects the benefits of the policy to start creeping in with six months. “I must mention that on August 1, we launched a campaign for both CASA, as well as home loans,” Rego added.The bank expects to recover Rs 4,350 crore bad loans through recovery, upgradation and write-off of NPAs.