Allahabad Bank to take MTN route to raise $500 million for hong kong business

KOLKATA: Allahabad Bank has decided to engage four arrangers, including JP Morgan , to raise $500 million in medium-term notes overseas to fund its burgeoning Hong Kong business. The bank will issue dollar-denominated MTN for a tenure of five-and-a-half years and list it.

According to executive director MR Nayak, the other arrangers to manage it are HSBC Holdings , Royal Bank of Scotland and Standard Chartered .

"We would like to raise the fund in the next 6-8 weeks," bank chairman and managing director JP Dua told ET.

It needs to get a credit rating before the issue enters the market. Mr Dua said the fund will be used for business expansion in foreign locations, mainly in Hong Kong, which has some 45,000 ethnic population.

It is looking to launch its second branch at Kowloon in the northern part of Hong Kong to seize the opportunity. Its maiden overseas branch in Hong Kong central business region has an outstanding loan portfolio of Rs 3,300 crore, reflecting a 200% growth during 2010-11. The bank is planning to open branches in Singapore and Dhaka.

It wants to upgrade its representative office in Shenzhen in southern China region to a branch too. The Kolkata-based bank has also announced a 25 basis points rise in lending rates on Wednesday. Its executive director MR Nayak told ET that the bank has decided to hike the benchmark base rate by 25 bps to 10.25% from July 15.

Accordingly, its fresh and existing housing and car loans will be dearer by this extent, as these are mostly linked to banks' base rate. Interest rates on loans and advances are linked to the base rate since July 1, 2010. It has raised the benchmark prime lending rate (BPLR) by 25 bps to 14.50% a year.

BPLR is linked to loans and advances sanctioned up to June 30, 2010. Borrowers who opted for fixed rate loans will not be impacted by the latest decision as their contracted rates will remain unchanged.

Source: EconomicTimes