FRESH CAPITAL FOR UBI; MERGER WITH UNION BANK UNLIKELY

MUMBAI/NEW DELHI: The government on Monday said there was no plan to merge the troubled Kolkata-based United Bank of India (UBI) with Union Bank, dismissing market buzz on the issue. Instead, it will infuse fresh capital into the bank.

UBI has been battling record bad loans and problems after chairperson and managing director Archana Bhargava quit last week ahead of her term. Bhargava’s resignation came amid reports of a probe by the Reserve Bank of India and the government regarding the piling up of bad loans.

UBI reported a net loss of `1,238 crore in October-December against a net profit of `42 crore a year ago. Its non-performing assets (NPAs) rose to `8,546 crore at the end of December, 2013 from `2,964 crore in March 2013.

“Our immediate focus would be on recovery of NPA,” a senior government official told HT.

The government and the RBI are likely to keep a close watch until UBI is out of the woods. The Centre holds 88% stake in UBI.

Banking unions have demanded an enquiry. “There must be an enquiry into it to investigate how the bank’s financial health was allowed to deteriorate to such a level,” said CH Venkatachalam, general-secretary, All India Bank Employees’ Association.

“The NPA problem is with Union Bank as well, (which has an NPA of 3.85%)… a possible merger would harm both,” said Silky Jain, research analyst at brokerage Nirmal Bang.

Finance minister P Chidambaram, in the interim budget, had earmarked `11,200 crore for recapitalisation of public sector banks.