Punjab National Bank (PNB), India's fourth-largest state lender by assets, could take control of some of the country's most heavily indebted steel companies and sell them on as part of a restructuring backed by New Delhi, bank officials said. PNB, a quarter of whose nearly $4 billion portfolio of steel loans is stressed, is considering taking charge of some companies over the next two years, changing their management and then selling stakes, Executive Director K.V. Brahmaji Rao said. The bank is also talking to its lending partners about carrying out debt-for-equity swaps, which would dilute the stakes of existing shareholders and give creditors majority ownership, but nothing has been finalised. "We are getting feelers from some local investors who are interested to buy stakes in these companies," Rao told Reuters on Tuesday, declining to name the borrowers or the interested parties. The issue has a broad significance in India, since banks, fearing more loans could go sour, have slowed financing to roads, ports and mining projects, strangling Prime Minister Narendra Modi's efforts to revive the economy. Total bad loans held by all banks are estimated to be at a decade-high of $49 billion. PNB, fellow government-controlled State Bank of India and other lenders are saddled with stressed loans of about $23 billion to the steel industry, which is struggling with weak prices and surging imports from an oversupplied China. Among steel companies, debt-heavy Electrosteel Steels Ltd said on Monday its lenders would restructure its loans, while Bhushan Steel is another big borrower. Nittin Johari, finance head of Bhushan Steel which recently restructured its $5 billion debt, said he was not aware of any plans by lenders to seek control of any company. The finance ministry is considering a rescue package for steel companies, including hiking India's 10 percent import duty and injecting funds into companies deemed viable, a senior ministry source said. A senior steel ministry official said raising the import duty was a priority. (Reuters)
Read More
Three of India's leading state-run lenders reported a drop in their first quarter net profits, weighed down by rise in provision for bad loans and cooling expectations of a turnaround in the country's dominant but ailing government banking sector. India's banking sector, dominated by more than two-dozen state-run lenders, has been hobbled by its highest bad-loan ratio in a decade as slower economic expansion hurt companies' abilities to service debt. While the pace of additions to bad loans has started slowing for most banks, higher provisioning is hurting their profits. State-run lenders also account for a majority of the sector's bad loans. Bank of India Ltd, the nation's third-biggest state-run bank by assets, saw its profit for the three months to June plunge 84 per cent from a year earlier, while its bad loans ratio jumped to a 13-year high of 6.8 per cent. The Mumbai-based lender is stepping up bad loan recovery efforts and aims to keep its bad loan ratio for the full fiscal year to March 2016 at lower levels than 5.39 per cent for the last fiscal year, chief executive B P Sharma told reporters. "We have deployed majority of our resources to focus on recovery and merit-based upgradation of stressed account," he said, adding the bank will be "a little bit stringent on taking exposure on risky accounts". Bank of India's gross bad loan ratio of 6.8 per cent as of end-June was the highest since 2002, he said. The bank's shares ended 5.7 per cent lower to their lowest close since September 2013 in a Mumbai market that fell 0.3 per cent. "A turnaround will take some time. And it will depend on the overall industrial recovery in the country ," said R K Gupta, managing director at Taurus Asset Management. However, he said that he would be a buyer of shares in state lenders, which trade at a steep discount to their private-sector rivals. Punjab National Bank, the fourth-biggest state-run lender by assets, said its quarterly profit almost halved to Rs 721 crore. Its shares rose 5 per cent as its bad loans ratio fell from the previous three months, although it was still higher than a year earlier. Union Bank of India, the sixth-biggest state-run lender by assets, saw its first-quarter net profit falling 22 per cent to Rs 519 crore, which was ahead of analysts' estimate of Rs 499 crore. Its gross bad-loan ratio increased to 5.53 per cent in June quarter. The second-biggest state-run lender, Bank of Baroda, and the biggest private-sector lender, ICICI Bank, are due to report first-quarter earnings this week. The market leader, State Bank of India, reports earnings in August.(Reuters)
Read More
Bank of Bhutan has selected TCS BaNCS for its Core Banking Solution to power its next generation banking services.TCS has an enviable track record of fail-proof core banking implementations across the globe which in turn, mitigates our core banking transformation risk. Its ability to reduce time to market for new bank offerings and to seamlessly integrate with third-party systems gives us the assurance that we have chosen the right partner, compant said in a press statement.Pema Nadik, Chief Executive Officer of the Bank of Bhutan, said, “TCS BaNCS will help us transform our technology ecosystem in keeping with our plans for quick growth and expansion.”Bank of Bhutan is the largest commercial bank in the Kingdom of Bhutan with a network of 46 branches, including extension branches, 62 ATMs, a state-of-the-art mobile banking solution and a dedicated Contact Center, fulfilling the banking needs of the public, business community and the Royal Government of Bhutan. Bank of Bhutan is at present on the Oracle FLEXCUBE CBS platform, having implemented it in the year 2009. With a focused goal of moving onto a high-growth trajectory, the Bank has embarked on a project of upgrading its core banking system and has selected TCS BaNCS as the solution partner for this engagement and to replace the existing system, after an in-depth evaluation of shortlisted vendors from a broad array of leading IT software providers.(BW Online Bureau)
Read More
Punjab National Bank, India's fourth-biggest state-run lender by assets, reported on Tuesday a 49 percent drop in quarterly profit as provisions nearly doubled. The stock, however, jumped as much 6.7 percent as the bank's bad loan ratio fell marginally in the three months to June, compared with the previous quarter. Net profit fell to 7.21 billion rupees ($112.61 million) for its fiscal first quarter to June 30, from 14.05 billion rupees reported a year earlier, the New Delhi-based lender said. Analysts on average had expected a net profit of 9 billion rupees, according to data compiled by Thomson Reuters. Gross bad loans as a percentage of total loans fell slightly to 6.47 percent in the June quarter from 6.55 percent in the previous three months, but were higher than 5.48 percent a year earlier. Provisions, including for bad loans, nearly doubled from a year earlier to 18.11 billion rupees.
Read More
Union Bank of India, the nation's sixth-biggest state-run lender by assets, reported a smaller-than-expected 22 percent fall in quarterly profit even as bad loans rose. Net profit fell to 5.19 billion rupees ($81 million) during its fiscal first quarter to June 30, from 6.64 billion rupees reported a year earlier, the Mumbai-based lender said. Analysts on average had expected a net profit of 4.99 billion rupees, according to data compiled by Thomson Reuters. Gross bad loans as a percentage of total loans rose to 5.53 percent in the June quarter from 4.96 percent in the previous three months and 4.27 percent in the same period a year earlier.
Read More
Bank of India, the nation's third-biggest state-run lender by assets, reported a sharply bigger-than-expected 84 percent fall in quarterly profit as bad loans surged. Net profit fell to 1.3 billion rupees ($20.3 million) for its fiscal first quarter to June 30, from 8.06 billion rupees reported a year earlier, the Mumbai-based lender said. Analysts on average had expected a net profit of 3.31 billion rupees, according to data compiled by Thomson Reuters. Gross bad loans as a percentage of total loans rose to 6.8 percent in the June quarter from 5.39 percent in the previous three months and 3.28 percent a year earlier. (Reuters)
Read More
Royal Bank of Scotland Group Plc is in talks to sell its Indian private banking business to Sanctum Wealth Management, a firm set up by its local private banking business head Shiv Gupta, a spokeswoman for the bank said on Monday. Switzerland's Union Bancaire Privee said in March it was buying the overseas business of British wealth manager Coutts from RBS, as part of the bank's drive to pull back from foreign markets and focus on UK retail and commercial banking. RBS' India private banking business was not part of that deal. RBS has signed a non-binding framework agreement and is now in discussions to sell the Indian private banking unit to Sanctum Wealth, the spokeswoman said in an e-mailed statement, without giving details. "This marks another step towards delivering the strategy to make RBS a stronger, simpler, more sustainable business, more aligned with the needs of our customers in the U.K. and Western Europe," the statement said. A source with knowledge of the transaction with Sanctum said RBS India private banking managing director Gupta could rope in some private investors in Sanctum Wealth after the transaction was completed. In India, RBS competes with global banks including Barclays Plc, Citigroup Inc, Standard Chartered Plc as well as a host of domestic financial firms in the wealth management business. Many foreign wealth managers had scrambled to open up shop in India a few years back and aggressively ramped up operations to take advantage of robust economic growth, only to find themselves struggling. Although Asia's third-largest economy has been minting millionaires at a strong pace, it has failed to translate into profits for the banks that have set up teams of well-paid bankers to help manage those riches. Cut-throat competition, high staff costs and weak markets are squeezing revenue of the top private banks, while growth opportunities are limited by regulations that restrict product offerings. Faced with these challenges, Morgan Stanley <MS.N> in 2013 decided to sell its India wealth management unit to Standard Chartered, after entering the fiercely competitive market about four years ago. Some industry executives, however, say that the long-term prospects of the private banking business in India remains attractive, as a pickup in the country's economic growth is expected to boost the number of high net worth individuals. (Reuters)
Read More
Hinduja Group-promoted IndusInd Bank on Monday (27 July) said it has completed acquisition of Royal Bank of Scotland's diamond and jewellery financing business in the country."IndusInd Bank has completed the acquisition with the entire business portfolio migrating to the bank. The acquired loan book is approximately Rs 41 billion (Rs 4,100 crore," IndusInd Bank said in a BSE filing.In April this year, IndusInd Bank said it has entered into an agreement with Royal Bank of Scotland to acquire the latter's diamond and jewellery financing business in the country for an undisclosed sum.IndusInd Bank is already into diamond and jewellery financing business and this acquisition is expected to enhance its position in the segment.RBS has been trying to exit its operations in India since its UK-based parent went into a government bailout after the 2008 global credit crisis.After the Reserve Bank in 2012 allowed RBS to sell its retail banking business to rival HSBC, the UK based bank had said it would wind down its business gradually.RBS has merely 20 branches in the country spanning just 10 cities.In August 2013, RBS had sold its credit card business, mortgage and commercial banking portfolios to mid-sized private sector lender Ratnakar Bank. The deal included acquiring about 1,20,000 customers and employees.RBS still retains its presence in the wholesale business and offers financing, risk management, investment banking, cash, payments, trade finance and wealth management solutions to its clients.(PTI)
Read More
RBI has asked the I-T department to get a 'tax angle' verification done for four dozen corporate entities seeking licence to operate small finance and payment banks in the country. RBI Governor Raghuram Rajan had recently written to the Central Board of Direct Taxes (CBDT), the apex policy making body of the Income Tax department, to expedite the matter and provide the banking regulator with inputs about individuals at the helm of these entities with businesses spread across the country and abroad, officials said. CBDT has asked its investigation and regular assessment ranges across the country to "quickly" collect the data and submit them so that RBI can take a final view on the grant of licences to eligible parties. "The inputs sought relate to financial and tax history of close to 50 entities, their owners and senior executives who have applied for getting RBI's licence to run small finance and payment banks," they said. It has been instructed by RBI and CBDT, the officials said, that any adverse record or observation about financial dealings of these entities, found out either by way of an earlier action by the taxman or through regular mechanism of intelligence and data gathering, should be reported. "In case there is no adverse finding, the I-T will send an all okay report," one of the officials said. Those entities for which tax clearances have been sought include Intellecash MicroFinance Network Company Private Ltd., SKS MicroFinance Limited, Capital Local Area Bank Limited, Electronica Finance Limited, Repco MicroFinance Limited, SE Investments Limited, RGVN (North East) Micro Finance Limited, Ujjivan Financial Services Private Limited, and Ashika Global Securities Private Limited. . Vodafone M-Pesa Limited, NSDL, Cholamandalam Distribution Services Limited, Kishore LaxmiNarayan Biyani, RIL, NSE Strategic Investment Corporation, Aditya Birla, Airtel M Commerce Services Limited, Videocon D2H, and Sonata Finance Private Limited are also among the entities about which clearance has been sought from the tax authorities. Rajan had earlier said the Reserve Bank of India would be able to announce new sets of bank licences, or at least one set of them, by August-end. The RBI had received 72 applications for small finance bank licences and 41 applications for payment bank licences. The objective of licencing small banks is to promote financial inclusion by offering saving vehicles and credit to small business units and other unorganised sector entities. Small finance banks will primarily undertake basic banking activities of acceptance of deposits and lending to unserved and under-served sections, including small business units, small and marginal farmers, micro and small industries and unorganised sector entities. Payment banks would be allowed payment and remittance services through various channels. However, such lenders cannot issue credit cards or undertake lending activities. (PTI)
Read More
Indian-origin banker Anshu Jain, Deutsche Bank's former co-chief, has got a clean chit from the German financial watchdog BaFin, on charges of allegedly lying to the regulators about the interbank rate rigging scandal. Jain, who quit as co-CEO of Deutsche Bank with effect from June 30, was earlier accused of having "knowingly made inaccurate statements" to Germany's central bank, Deutsche Bundesbank, thus misleading regulators on what he knew about the alleged manipulation of inter-bank rates such as Libor. As per reports, the Federal Financial Supervisory Authority (BaFin) had criticised Deutsche Bank and Jain in its report on investigations into the rate fixing scandal. Bafin and Deutsche Bundesbank together share the supervision of banking business in the country. A report in business daily Financial Times, however, said on Saturday that BaFin has dropped "a key strand of its investigation" and has cleared Jain of allegedly lying to the central bank about what he knew about the rate manipulation. On its part, Deutsche Bank said, "We continue to work with our regulator to bring this inquiry to a conclusion." In a letter written to Jain earlier this month, BaFin President Felix Hufeld said that the regulator was "dropping that part of its probe into Libor-rigging at Deutsche after considering that the 'probable' interpretation of the evidence weighed in Jain's favour," the report said. "The suspicion that you made knowingly incorrect statements to a regulator seems unsubstantiated to me... This aspect will therefore no longer be relevant in the continued assessment by BaFin," Hufeld wrote in his letter to Jain. The BaFin President, however, added that all other allegations against Jain and Deutsche Bank were still being evaluated by the regulator. Jain, 52, had reportedly told the central bank that he had no knowledge of rumours of possible rigging in 2008. Deutsche Bank had said last month that Jain's comments were taken out of context. "Jain disputes as baseless the allegation that he misled the Bundesbank in his 2012 interview. "He understood Bundesbank's question about when he first learned of rumours of possible LIBOR rigging to mean rigging at Deutsche Bank itself which he learned of in 2011, not rigging in the marketplace which was publicly reported on in 2008," the bank had said in a statement on June 27. The bank paid USD 2.5 billion earlier this year to settle probes in the US and the UK into alleged manipulation of Libor and Euribor benchmark rates by its traders. Jain had joined Deutsche Bank more than 20 years ago and he served as a co-CEO for three years.(PTI)
Read More
