Centurion Bank has, meanwhile, forwarded the pricing of its maiden public issue to the Reserve Bank of India for clearance. The premium band for the issue is likely to be fixed at Rs 5-8, which would translate into an issue size of Rs 61 crore. While the Unit Trust of India (UTI) will offload 2 crore equity shares in favour of the general public, UTI Bank will make a fresh issue of 1.5 crore equity shares of Rs 10 each at a premium of Rs 11-15 per share. The fresh issue of shares will take up the bank's equity base to Rs 130 crore from Rs 115 crore at present. The promoters' stake on the enhanced equity base will fall to 73 percent from 100 per cent. On the current paid-up equity capital of Rs 115 crore, UTI holds Rs 100 crore while LIC and GIC along with its subsidiaries hold Rs 7.5 crore each. UTI Bank has lined up plans to launch a co-branded credit card in August. The bank is currently in talks with Citibank, Stanchart and Capital One for launching the card.

INSIGHT

UTI Bank's earnings have grown merely nine per cent in 1997-98. Even considering a future growth rate of 25 per cent in earnings, we get an EPS on diluted equity at Rs 1.58 per share. The historical price-earnings ratio of ICICI Bank at present is 11.5. The comparable historical PE for UTI Bank, taking its offer price at Rs 21, works out to 14.6. Hence, the premium charged in the present market conditions looks rather high. Moreover, a net NPA of 5.63 per cent in the first few years of operation is quite high. But the fact remains that ICICI Bank's price has steeply fallen in this bear phase and so have the P/E multiples enjoyed by it. The timing of theissue will be important.