Andhra Bank reacts positively on stake hike by GoI

The shares of Andhra Bank reacted positively to the news of stake hike by Government of India (GoI) in the bank. As per GoI announcement, the bank will be merged with Union Bank of India along with Corporation Bank.

The press release by the bank to stocks exchanges mentioned that it has issued and allotted 11,10,49,416 equity shares of Rs 10 each at Rs 18.01, per equity shares (including a premium of Rs 8.01 per equity share) to GoI on a preferential basis. After the said allotment, GoI’s holding has been increased from 87.81 per cent to 88.25 per cent equity shares.

Earlier, the Board of Directors of the Bank had approved a resolution for raising equity capital of the Bank through the issuance of equity shares by way of preferential allotment to GoI to an extent of Rs 200 crore.

The bank has already received more than Rs 5,000 crore (as of end of FY19) in GoIs recapitalisation schemes. Andhra bank, along with other PSU banks, has garnered significant support from the government.

In terms of stock returns, PSU banks have performed very poorly, despite a consistent capital infusion by the government. Set of 18 PSU banking stocks has declined as much as 49 per cent since January 2019 till date.

At 12.00 pm, the stock was trading at Rs 13.21, up by 1.38 per cent on BSE.