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Standard Chartered Bank, the largest foreign bank in the country in terms of branch presence, has sold Rs 900-1,000 crore of distressed assets to Mumbai-based International Asset Reconstruction Company (IARC), in an all-cash deal.
This took place in two tranches and was one of the largest deals in the asset reconstruction space in recent months, industry players said.
“Barring two or three accounts, the assets were purchased for cash considerations. We have started recovery in some of these accounts. The progress is reasonably good so far,” Birendra Kumar, managing director and chief executive officer of IARC, told Business Standard.
The loans were sold at a discount to the book value. Still, StanChart said it had made a profit by selling these distressed assets, as it had also bought the loans at a sharp discount from other banks and financial institutions. The transaction involved 150-175 mid-corporate and small & medium enterprises accounts.
“The sales are by our Alternate Investment Group business, which deals in distressed assets of banks and other lenders in the financial services sector. These transactions are profitable and part of our normal business activity,” the official spokesperson of the bank said, without offering details.
Sources said the bank sold these assets as it found an opportunity to make profit in an area where very few big-ticket transactions happen.
In 2011-12, StanChart’s net profit from its India branches fell 15.7 per cent, as it made provisions to cover the rise in non-performing loans. Both the gross non-performing asset ratio and net bad loan ratio deteriorated, by 321 basis points and 43 bps, respectively, during the year.
The total exposure to the top four non-performing accounts was Rs 1,989 crore last financial year, compared with Rs 336 crore a year before. In the industry segment, which includes loans to micro and small, medium and large companies, the net non-performing asset ratio widened to 0.65 per cent from 0.46 per cent.
Source: Business Standard
This took place in two tranches and was one of the largest deals in the asset reconstruction space in recent months, industry players said.
“Barring two or three accounts, the assets were purchased for cash considerations. We have started recovery in some of these accounts. The progress is reasonably good so far,” Birendra Kumar, managing director and chief executive officer of IARC, told Business Standard.
The loans were sold at a discount to the book value. Still, StanChart said it had made a profit by selling these distressed assets, as it had also bought the loans at a sharp discount from other banks and financial institutions. The transaction involved 150-175 mid-corporate and small & medium enterprises accounts.
“The sales are by our Alternate Investment Group business, which deals in distressed assets of banks and other lenders in the financial services sector. These transactions are profitable and part of our normal business activity,” the official spokesperson of the bank said, without offering details.
Sources said the bank sold these assets as it found an opportunity to make profit in an area where very few big-ticket transactions happen.
In 2011-12, StanChart’s net profit from its India branches fell 15.7 per cent, as it made provisions to cover the rise in non-performing loans. Both the gross non-performing asset ratio and net bad loan ratio deteriorated, by 321 basis points and 43 bps, respectively, during the year.
The total exposure to the top four non-performing accounts was Rs 1,989 crore last financial year, compared with Rs 336 crore a year before. In the industry segment, which includes loans to micro and small, medium and large companies, the net non-performing asset ratio widened to 0.65 per cent from 0.46 per cent.
Source: Business Standard
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