Union Bank of India to raise a sum of Rs.470 crore through the Employee Stock Purchase Scheme

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Union Bank of India, a leading public sector lender, is looking to raise up to a total of Rs.470 crore through the Employee Stock Purchase Scheme (ESPS). Shares under this scheme will be issued for a price between Rs.58 and Rs.59 apieceThe issue is expected to open on 5 March 2019.  

Union-Bank-of-India
Union Bank of India will be issuing shares under the Employee Stock Purchase Scheme to raise up to Rs.470 crore. The price band for the share sale has been fixed at Rs.58 – Rs.59 apiece.

ESPS allows banks to expand their capital through employee participation and also helps reduce the stake held by the government in the bank. The Securities and Exchange Board of India (SEBI) requires all public sector lenders to reduce the government holding in their respective banks to under 75%. Aon December 2018, the Government of India held a 67.43% stake in Union Bank of India.  

In addition to giving its employees the option to purchase its shares, Union Bank of India will also be allowing immediate retirees to purchase shares under the Employee Stock Purchase Scheme. When shares are issued under this scheme, banks usually offer a discount of up to 25% on the price of the shares. Union Bank of India will be offering, issuing, and allotting up to a total of 8 crore equity shares to individuals who are eligible via the Employee Stock Purchase Scheme (ESPS).  

Given that lenders are not allowed to give loans to their employees for the sole purpose of purchasing shares under the Employee Stock Purchase Scheme, Union Bank of India has arranged for its employees to take loans from Canara Bank.  

In the recent past, a number of banks including United Bank of India, Allahabad Bank, and Indian Overseas Bank have sold their respective shares via ESPS.  

Source: The Economic Times 

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