YES Bank plans to raise $500 m

YES Bank Ltd has proposed to raise up to $500 million in one or more tranches through multiple options including Qualified Institutional Placement.

In a filing with the stock exchanges, the bank said its board of directors on April 17 empowered the capital raising committee, a sub-committee of the board, to raise up to $500 million in one or more tranches.

The funds will be raised through QIP or any other international offering like Global Depository Receipts (GDRs)/American Depository Receipts (ADRs), ordinary shares through (Depository Receipt Mechanism) Scheme 1993, Follow on Public Issue or by any other appropriate mode as decided by the committee.


Source: thehindubusinessline

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SBI chief sees no impact of sliding prices on gold loans

SBI Chairman Pratip Chaudhuri said sliding gold prices will not have much impact on his bank’s gold loan portfolio, which currently stands at Rs 35,000 crore.

A chunk of the gold loans have been taken by farmers for agriculture purposes. Generally, the bank has been lending only up to 70 per cent of the peak value of the gold. “We have the security of the crop or farm. Generally, we keep 30 per cent margin and we will have to review that valuation. So, loan-to-value ratio of 70 per cent may come down.”

“We would be revising our advisory for gold loans with the valuations. So, as of now there is no immediate impact of the drop in gold prices.... If it further falls then it might be an issue,” said Chaudhuri.

An increase in corporate loans helped State Bank of India clock 21 per cent growth in loans in 2012-2013, according to the Chairman.

21% loan growth

Loan growth was at 21 per cent (against 16.5 per cent in FY12) as corporate demand surged especially during late February and March this year, he said. “We ended the year with a deposit growth of close to 15 per cent (14.88 per cent) entirely on account of retail deposits. Our bulk deposits have reduced to 1 per cent from 4.5 per cent (of total deposits). “Had we retained the bulk deposits, the overall deposit growth would have been higher,” he added.

The SBI chief said that the bank is not willing to risk lowering its deposit rate any further.

Home loans grew 30 per cent with an average ticket size of Rs 15- 20 lakh. Takeover of home loans from other banks accounted for 25 per cent of the home loan growth in FY13. Auto loans increased 25 per cent, the Chairman said.

For FY13, margins were at around 3.70-3.75 per cent.

beena.parmar@thehindu.co.in


Source: thehindubusinessline

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YES Bank net up 33% in Q4 on rise in interest income

Robust interest income and loan growth helped YES Bank post a 33 per cent rise in net profit at Rs 362 crore in the fourth quarter ended March, 2013.

The mid-sized private sector lender had posted a net profit of Rs 272 crore in the year-ago period.

Net interest income (difference between interest earned and expended) increased 42 per cent to Rs 638 crore on the back of healthy growth in customer assets and net interest margins (NIM). Rana Kapoor, Managing Director and CEO, said, “There is a strong platform for interest rates to come down and we will see further reduction in cost of funds. We expect NIM to increase by 15-20 basis points in FY 2014.”

As on March 31, 2013, total advances grew 24 per cent to Rs 47,000 crore, while deposits rose 36 per cent to Rs 66,956 crore.

Gross non-performing assets declined to 0.20 per cent (from 0.22 per cent), while sequentially it increased from 0.17 per cent in Q3 FY13.

“We plan to de-risk high risk sectors such as power and select infrastructure segments in the year ahead with the challenging economy and negative global environment. This can help us achieve credit growth at 24-25 per cent,” Kapoor said.

The restructured book stood at Rs 144 crore, up from about Rs 192 crore in the year-ago quarter. For the full year ending March, 2013, the bank posted a 33 per cent rise in net profit at Rs 1,301 crore compared with Rs 977 crore in FY12. NII increased 47 per cent to Rs 2,219 crore (Rs 1,616 crore in FY12).

The bank’s board of directors has approved the proposal to raise $500 million which will be put forth before the shareholders in the annual general meeting in June.

“We will prefer to raise the funds through GDR (global depository receipts) or a QIP (qualified institutional placement),” Kapoor said.

On Wednesday, the bank shares ended 2.18 per cent higher at Rs 479.50 on the Bombay Stock Exchange.

beena.parmar@thehindu.co.in


Source: thehindubusinessline

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Andhra Bank’s business grows 17% in 2012-13

Andhra Bank’s business has grown by 17 per cent in the financial year ended March 31, 2013.“Our total business has touched Rs 2.24 lakh crore in 2012-13 compared with Rs 1.92 lakh crore in the previous year,’’ B.A. Prabhakar, Chairman and Managing Director, told Business Line.

Deposits and advances grew at 17 per cent and 18.4 per cent respectively while net interest margin was in the range of 3.25–3.3 per cent, he said.

Andhra Bank’s board will meet on May 2 to finalise Q4 and full-year numbers.

TARGET

For the current financial year, a 20 per cent growth in business has been targeted. “This will be driven chiefly by agriculture, small and medium enterprises and retail lending. If corporate demand picks up, we will also seize the opportunity there,’’ Prabhakar said.

There was untapped potential in agricultural lending, he said adding: “We are all hoping for a normal monsoon as agri portfolio can grow well further. There is still potential in agriculture which is not impacted by downturn.’’

The bank plans to open 200 new branches this year. Last year, it opened 160 branches. It will recruit 2,400 officers and clerks this year. Andhra Bank would also raise fresh capital this year and the modalities were being worked out, Prabhakar said while declining to mention the quantum of funds to be raised.

Though there is still some ‘stress’ on the asset quality, there is no major concern on the non-performing assets, he said.

HR FOCUS

To ramp up employee productivity, a human resources transformation initiative has been launched. “Detailed manpower mapping, succession plan and robust performance measurements are being done,’’ the CMD said.

On the up-coming policy review by the Reserve Bank of India, Prabhakar said a 25 basis points cut in key rates is likely as inflation has dropped to below six per cent.

naga.gunturi@thehindu.co.in


Source: thehindubusinessline

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Union Bank new office in Varanasi

Union Bank of India opened its second Field General Manager’s office at Varanasi in Uttar Pradesh.

The Varanasi FGM’s office has been carved out from the existing FGM’s office in Lucknow to give more support to the customers in 25 districts, with majority of them located in the eastern part of Uttar Pradesh.

The Varanasi FGM’s office was inaugurated by K.C. Chakraborty, Deputy Governor, Reserve Bank of India.

Union Bank has 694 branches in Uttar Pradesh. The bank’s total business mix of the State is Rs 46,634 crore comprising Rs 35,768 crore deposits and Rs 10,867 crore advances.


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State Bank chief wants 100 bps cut in CRR

A cut in Cash Reserve Ratio will be much more effective in bringing down lending rates than a repo rate cut, said State Bank of India Chairman Pratip Chaudhuri.

A strong votary of abolishing the CRR, the SBI chief said he will bring the base rate down by 20 basis points, if the Reserve Bank of India cuts the CRR by 100 basis points. Base rate is the minimum lending rate below which banks cannot lend.

Policy meeting

The RBI will review key policy rates in its annual policy meeting scheduled on May 3.

Currently, the CRR (the slice of deposits that banks keep with RBI) and the repo rate (the interest rate at which banks borrow short term funds from the RBI) are at 4 per cent and 7.50 per cent, respectively.

“Repo rate has very little or insignificant impact on the cost transmission. The only thing that can significantly bring down the base rate is the CRR. “Looking at the inflation numbers yesterday, I am encouraged to recommend a 1 per cent (100 basis points) reduction in CRR,” Chaudhuri said.

Also, a CRR cut will release more liquidity into the banking system. “The banks will be less desperate for deposits so it (liquidity) will have a more benign impact on the interest rates,” the SBI chief said.

THREE-DAY DEPOSITS

Chaudhuri, who mooted the idea of banks being allowed to introduce ultra-short term deposits of three days maturity, said there will not be any liquidity management issues if such a product is introduced.

Pointing out that absence of such a product is making banks uncompetitive, Chaudhuri reasoned that if banks can take care of seven-day deposits, then they can take care of three-day deposits too.

The SBI chief said that he has explained the new idea to the RBI top brass.

In any case, there is no rule saying that customers cannot withdraw money before the seven-day maturity period, he said. “So, if a seven- day deposit is stable then three-day deposits will also be stable.”

SB deposits

Chaudhuri pointed out that the entire savings bank deposits of banks constitute 25 to 40 per cent of their total deposits and they are withdrawable on demand.

satyanarayan.iyer@thehindu.co.in


Source: thehindubusinessline

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RBI meet in Mangalore

Reserve Bank of India (RBI) will conduct a meeting to listen to the grievances of the public in Mangalore on April 16.

A press release said here that RBI will conduct a ‘town hall meet’ for the benefit of customers of various banks at the auditorium of the corporate office of Corporation Bank in Mangalore at 11.30 am on April 16.

K.C. Chakrabarty, Deputy Governor of RBI, will be present. The purpose of the meeting is to listen to the grievances regarding deficiencies in services and problems while dealing with the banks.

Customers of all banks can take part in the programme, the release added.


Source: thehindubusinessline

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Union Bank hits global debt market with $500 mn bond issue

State-run Union Bank of India has hit the global debt market to raise around $500 million through bond issuance, said two merchant bankers working on the issue.

This has comes days after successful bond issuances by State Bank of India last week and a dozen of corporates in recent months.

“We have launched roadshows in the leading Asian and European finance centres on behalf of Union Bank of India last week, as part of the bank’s plan to launch a benchmark issue.

If the market condition is conducive, we will close the sale programme this week,” the merchant bankers told PTI today.

They also said, this is part of the medium term note (MTN) programme of the city-based bank and the fund will be deployed to meet its overseas fund obligations.

The bank’s head D Sarkar could not be reached for comments immediately.

It can be noted that last Friday, SBI set a new benchmark in bond pricing by selling $1 billion worth fixed rate five-year senior unsecured bonds at coupon 3.25 per cent, 87 basis points (bps) lower than the coupon it is paying to the bondholders of its previous $1.25-billion issue last July.

So far 11 companies through 13 issuances raised a whopping $7.5 billion this year, as rupee funds remain too costly at around 12-14 per cent, while foreign funds are much lower.

The highest pricing of these debts is just under 6 per cent, while the lowest coupon is a paltry 3 per cent that HDFC Bank is paying to its investors for its $500 million issue sold this January.

Last week, Essar Steel said it would dollarise its Rs 20,000 crore rupee loans if the RBI allows doing it. According to I-bankers, RIL, ONGC Videsh and Tata Steel are also planning to borrow abroad.


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Karnataka Bank gets ISO certificate for IT systems

Karnataka Bank has secured the ‘ISO 27001:2005’ certificate for its three IT (information technology) units.

A press release from the bank said here on Monday that NQA (National Quality Assurance) — an assessment, verification and certification body accredited to the United Kingdom Accreditation Service — has awarded the ISO 27001:2005 certificate of registration to Karnataka Bank’s three IT units. Two of them are situated in Bangalore, and one in Mangalore.

The release said ISO27001:2005 specifies a well documented information security management system within the context of the organisation’s overall business risks. It outlines the best practice for ensuring business continuity, and minimises business damage by preventing and reducing the impact of security incidents. The certificate is valid for three years, the release said.

While internally ISO standards provide focus and discipline to the technology initiatives of the bank, externally ISO certification intends to bring confidence to clients, partners and regulators about the bank’s security seriousness.

“Our bank is the first among peer group banks to get this certification,” P. Jayarama Bhat, Managing Director, Karnataka Bank, was quoted as saying.

vinayak.aj@thehindu.co.in


Source: thehindubusinessline

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ICICI Bank to auction 11-kg pledged gold to recover loans

The country’s largest private sector lender ICICI Bank will auction this month gold jewellery weighing over 11 kg, pledged by more than 150 borrowers, who have defaulted on their payments.

The auction would be conducted by the bank’s branches in Uttar Pradesh, Bihar and Uttarakhand from April 18-22 for gold jewellery deposited by about over 150 customers as collateral for their loans, the bank said in a public notice last week.

While neither the exact value of the gold ornaments being auctioned nor the outstanding loans could be ascertained, an equivalent amount of gold would be worth over Rs 3 crore at current prices.

At present, gold prices have hit a one-year low at Rs 28,350 per 10 gm.

It is a usual practice to take gold loans by pledging jewellery with banks. But such ornaments can be auctioned by banks after giving sufficient notice to the borrower in case of payment defaults.

The notice further said: “In the event any surplus amount is realised from this auction, the same will be refunded to the borrower concerned, and if there is any deficit post the auction, the balance amount shall be recovered from the borrower through appropriate legal proceedings.”

The bank said the auction would take place at ICICI Bank branches in areas, including Allahabad, Meerut, Kanpur, Agra, Rudrapur, Varanasi, Dehradun, Bhagalpur and Patna.

ICICI Bank would auction gold jewellery weighing 8.5 kg on April 18, nearly 2kg on April 20 and around 940 gm on April 22.

Interested parties are required to submit a refundable security deposit of Rs 20,000 at ICICI Bank for participating in the auction process, the notice said.

In case the winning bidder refuses to accept the jewellery after the auction, then the security money would be forfeited, it added.

Last month, the bank had auctioned gold jewellery weighing nearly 25 kg worth over Rs 7 crore.


Source: thehindubusinessline

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Bank of America pays Mukesh Ambani Rs 1.3 cr as director pay

Indian billionaire industrialist Mukesh Ambani has been paid $240,000 (about Rs 1.3 crore) as director compensation for 2012 by global banking giant Bank of America - a position he would relinquish next month.

Ambani, who heads the Indian conglomerate Reliance Industries group, was paid a higher compensation of $276,816 by the bank in the previous year, 2011.

Ambani joined Bank of America’s board as an independent director in March 2011, but would step down from this position at the company’s next Annual Meeting of shareholders on May 8.

The US-based banking major announced last month that Ambani would step down as a director and join its new, non-fiduciary global advisory council.

The bank has disclosed the compensation paid to Ambani and other details in a notice circulated to its shareholders ahead of their Annual Meeting on May 8.

The bank also said that Ambani and five other directors currently on its board would not seek re-election at the Annual Meeting and would be replaced by new members on its board. The shareholders have been asked to ratify the changes.

As per the shareholder notice, a copy of which has been filed with the US markets regulator SEC as well, Ambani’s compensation for 2012 included $80,000 as ‘fees earned or paid in cash’ and $160,000 as stock awards.

In comparison, Ambani got fees worth $92,282 in cash and $184,534 through stock awards in 2011 - taking his total compensation for that year to $276,816.

As on March 13, 2013, Ambani held a total of 31,265 shares of the bank, which have been given so far to him as part of his director compensation.

As RIL Chairman, Ambani’s remuneration is not known as yet for the last fiscal 2012-13 that ended last month. Prior to this, Ambani’s remuneration at RIL has remained unchanged at Rs 15 crore for four consecutive years till 2011-12.

The bank said that its board held 13 meetings in 2012, and each of its current directors attended at least 75 per cent of the aggregate meetings of board and the committees on which they served, except for Ambani.

Ambani is a member on the Credit Committee and the Compensation and Benefits Committee of its board.

In further disclosures about its dealings with businesses associated to Ambani and other independent directors, Bank of America said admitted to having provided “banking products or services, including markets, commercial credit, investment banking, managed investments, personal products and treasury services, in the ordinary course, to” Reliance Industries (RIL) and other such companies.

However, the fees received from each of these companies, including RIL, were within the prescribed thresholds applicable for independent directors and were less than 2 per cent of its consolidated gross annual revenues, the bank said.

It made a similar disclosure about business with Reliance Group, headed by Mukesh’s younger brother Anil Ambani.


Source: thehindubusinessline

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Dena Bank hopes to get Rs 600 cr capital infusion this fiscal

Public sector undertaking Dena Bank hopes for Rs 600-crore capital infusion by the Government this financial year.

The bank had originally sought Rs 1,260 crore from the Government, and “we expect at least 50 per cent of that this year,” said Ashwani Kumar, Chairman and Managing Director of the bank.

Talking to a group of journalists here today, he said Dena Bank plans to expand its network by adding around 150 branches and 560 ATMs (automatic teller machine) during the current financial year.

The bank has pan-India presence with 1,600 branches and 560 ATMs across cities.

On the bank's performance, Kumar said it has been growing at 23-24 per cent year on year, and the total business (deposits and advances) is likely to be in excess of Rs 1,50,000 crore for 2012-13. “Our target is to touch Rs 4,00,000 crore in the next five years.”

Pressure on net interest margin

Admitting that there will certainly be pressure on net interest margin this year, he said the bank has been witnessing growth in the retail segment, particularly real estate and automobile sectors, which will drive the business growth.

According to him, the infrastructure sector is a major challenge for the bank, to which it has around 20 per cent exposure. Pointing to the state electricity boards restructuring account, he said the bank has a restructured SEB account portfolio of Rs 2,200 crore. The Tamil Nadu SEB restructuring to the tune of Rs 390 crore will come into the bank’s books during the current financial year, taking the total portfolio to Rs 2,600 crore.

ravikumar.r@thehindu.co.in

Source: thehindubusinessline

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PNB Metlife launches product to protect borrowers

PNB MetLife India Insurance Company Ltd (PNB MetLife) on Sunday announced the launch of its loan protection plan, Met Flexi Shield for PNB’s home and education loan customers.

This proposition provides protection against loan liability, in the event of unforeseen circumstances of the death of the borrower and offers full financial protection to the family.

“With the launch of this offering, we have added a customised life insurance product, which comes at competitive rates and offers best service to our customers at the branches”, said K.R. Kamath, Chairman and Managing Director of PNB.

The launch coincided with the auspicious day of Baisakhi, which happened to be the foundation day of the bank. Rajesh Relan, Managing Director and Country Manager, PNB MetLife, said this is the company’s first bundled proposition for PNB customers.

benchmark partnership

“With the launch of this compelling offering, we are taking another step in our journey to create a benchmark partnership and bring our products, technology and capabilities to PNB customers, to help achieve financial security ”.

srivats.kr@thehindu.co.in


Source: thehindubusinessline

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