Union Bank of India was registered on November 11, 1919 as a limited company with its registered office at 7, Marzban Road, Fort, Mumbai. Union bank shifted its registered office in 1921 to its own premises at Mumbai Samachar Marg, Fort, and Mumbai. In 1947, the ank  had only 4 branches; 3 in Mumbai and 1 in Saurashtra, all concentrated in key trade centers because the then Board of the bank was closely associated with trade and commerce. It was only from 1960 onwards that the bank's growth phase began and the bank aligned ts activities in line with national priorities. In the context of foreign exchange crisis faced by the country in the late 50s and early 60s, the bank geared itself to assist the export sector and push its foreign exchange business with an added emphasis. After nationalization in 1975, Belgaum bank Ltd., a private sector bank was merged with the bank. In 1985, Miraj State bank Ltd., a private sector bank was merged with the bank and in 1999; Sikkim bank Ltd. was merged with the bank.

Products & services:

The Union bank of India has its presence in all the area like Retail banking, corporate banking, Deposits, Loans, Debit card, Credit card and other banking and financial services. The bank is reducing the number of branches as part of a cost cutting process. The bank has been actively studying branch profitability and customer convenience at the branches over a period of time. As a result, it was seen that reduction in certain branches would result in complete and better service to the customer. Bank is increasing ATM banking and online Banking services, because these services provide better cost cutting. In order to cater to various markets in domestic business and in order to impart required focus to the specialized activities of the Bank, a thrust has been given to open specialized branches, which are focused on financing large and medium scale industry, small-scale industry, specialized trading, etc.

Union bank of India is focusing on rural and semi-urban centers where it can target mid- size and small entrepreneurs and the household sector for retail finance. As a part of its goal, the Bank has set growth targets in each of the areas of deposits and credit in rural/ semi-urban areas. The major markets both for deposits and lending operations are shifting to rural and semi-urban centers, which are emerging as new growth centers. The urban centers are witnessing huge competition due to competition from private sector and foreign banks.

Recent Developments:

Union Bank of India is has plan to increase its total business to nearly Rs 3 trillion by the end of this fiscal year. The bank said that they aim to achieve Rs 2,920 billion by the end of this fiscal as against the present level of Rs 2,370 billion. The loan book is well spread across various portfolios in order to avert stress in any particular sector.

Credit rating agency, CRISIL has assigned its rating of AA+/Stable to Union Bank of India's (Union Bank`s) Rs 5.0-billion Upper Tier II bonds, and has reaffirmed its ratings on the bank's other debts at AA+/Stable/P1+. The ratings continue to reflect Union Bank's healthy market position, comfortable resource profile, adequate earnings profile, and the support it is likely to receive from its majority owner, the Government of India (GoI), in the event of distress. The ratings also factor in the moderate, albeit improving, quality of the bank's assets and its average capitalisation.

Public sector lender Union Bank of India (UBI) today raised Rs 5 billion from bonds to meet business growth. The bank has raised additional capital to the extent of Rs 5 billion by issue of unsecured redeemable non-convertible subordinated upper Tier II bonds. The bond has tenure of 15 years, carries a coupon rate of 8.65% annually with call option after completion of 10 years from the date of issue. If the call option is not exercised the bonds have a step-up coupon of 0.50% a year for further life of the bond. The Bonds are rated as "BWR AAA" by Brickwork and "AA+/Stable" by CRISIL.

Valuation:

At current market price, stock is trading at an attractive valuation of 6.28 P/E multiple of its FY2010 estimated earnings. We recommend investors to buy "Union bank of India limited" with medium to long term investment horizon.