State-owned Bank of Baroda (BoB) on Wednesday said it will raise Rs 1,550 crore by issuing preference shares to the government.

The board at its meeting held on December 24, 2012, has approved issuance of shares of face value of Rs 10 each, for an amount upto Rs 1,550 crore, on preferential basis in favour of Government of India, BoB said in a filing on the BSE.

The prices of the shares would be decided as per the SEBI norms, it said.

Shares of the BoB closed at Rs 854.40, up 0.84 per cent on the BSE.

Preference shares are given higher ranking over common shares but subordinate to bonds in terms of claim.

At the end of September 30, the governmnet held 54.31 per cent stake in Bank of Baroda, according to BSE data.

The government has made a budgetary provision of Rs 15,000 crore for recapitalisation of public sector banks in the current fiscal.

Earlier this week, another public sector lender Union Bank of India had also announced raising of Rs 1,500 crore from bonds over the next three months.

Union Bank of India’s board approved raising of additional capital funds not exceeding Rs 1,500 crore during the year 2012-13 by way of issue of Tier—I and Tier—II capital bonds as per eligibility.

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