Deutsche Bank may sell its Indian retail business to boost capital

Deutsche Bank AG is weighing the sale of its Indian retail businesses as the German lender considers asset disposals to help boost capital levels, two people with knowledge of the matter said. The bank is also considering selling retail operations in European countries including Spain, the people said, asking not to be identified as the plans aren’t public. The Frankfurt-based lender declined to comment.

Chief Executive Officer John Cryan earlier this month announced a strategic overhaul that includes offering 8 billion euros in stock, selling part of the asset management business and raising 2 billion euros ($2.13 billion) of capital. While asset disposals are part of the strategy, Cryan stressed that they’ll play a minor role in the overall aim of boosting capital levels.

Deutsche Bank has previously sold parts of its India business. In 2010, it sold the mortgage business acquired as part of its takeover of German retail bank Postbank, and five years later, it sold its local asset management unit. The bank’s Indian business had 693 billion rupees ($10.5 billion) in assets in total at the end of its last fiscal year ended on March 31, 2016, according to company filings. It made a profit of 23.4 billion rupees that fiscal year.


Source : Financial Express

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Merger of SBI, Bharatiya Mahila Bank to herald slew of reforms

The government is expected to initiate reforms in the financial sector soon, starting with merger of Bharatiya Mahila Bank with State Bank of India, India’s largest lender.

Other key decisions that may be unveiled over the next 2-3 months include new capital infusion parameters for 2017-18, a consolidation road map for state-run banks and insurance firms and steps to resolve stressed assets.

“The merger of Bharatiya Mahila Bank may happen within the next few days,” said a senior finance ministry official, adding that consolidation of other state-run banks will be taken forward by bringing in the Banks Board Bureau. “The government is only expected to play a matchmaker. It is for the banks to finally decide and kick-start the process,” the official said. There are six to seven merger combinations on the table.

After being nudged by the government, SBI announced its intent in 2016 to merge its five associate banks and Bharatiya Mahila Bank. The cabinet approved the merger last month and said in a gazette notification that the entire undertakings of these five banks will stand transferred to and vested in SBI from April 1.

On the proposal to merge Bharatiya Mahila Bank with SBI, finance minister Arun Jaitley had then said, “It is under consideration as of now.”

The government is open to sell stakes in IDBI Bank in small tranches, including a possible follow-on offer of shares. “We are providing extended capital support to IDBI. Once it has more control on its bad loan portfolio, we are sure there will be enough interest from investors,” the official said. IDBI Bank’s gross nonperforming assets widened to Rs 35,245 crore, or 15.1% of gross advances, at the end of December from Rs 30,134 crore, or 13.05% of advances, as of September 30.

Separately, the finance ministry is giving final shape to more stringent norms on capital infusion in PSBs. The government budgeted Rs 10,000 crore for supporting banks in this fiscal.

“We have already directed banks to divest non-core assets. Increasingly, capital will only be allocated to performing lenders and laggards will either need to change business strategy or merge to achieve economies of scale,” said another ministry official aware of the developments.

The Banks Board Bureau will work with lenders to develop business strategies and capitalraising plans.

In 2016-17, the government decided to infuse funds early to allow banks to step up lending. It set aside 25% of funds to be disbursed based on performance parameters including more efficiency, growth of credit and deposits and reduction in operation costs.

Jaitley and senior government officials met Reserve Bank Governor Urjit Patel and his two deputy governors last week to take stock of stressed assets in staterun banks and firm up ways for their quicker resolution, which may include the setting up of a bad bank, an asset management company to tackle stressed loans.

The non-performing assets of public sector banks stood at Rs 5,89,502 crore (11.82%) in September, the government said in parliament last month.

Source : Economic Times

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SBI to hike stake in credit card JVs to 74 per cent

State Bank of India on Tuesday said it will hike its stake in its two credit card joint ventures with General Electric Company to 74 per cent.

SBI's board has given approval to infuse Rs 1,160 crore in the two JVs -- SBI Cards and Payment Services Pvt Ltd (SBICPSL) and GE Capital Business Processes Management Services Ltd (GECBPMSL)-- through purchase of equity shares from GE Capital so as to increase the bank's stake in both the companies to 74 per cent, SBI said in a filing to the BSE.

The American company seeks to exit SBI Cards.

SBI currently holds 60 per cent stake in SBICPSL and 40 per cent in GECBPMSL. The balance being held by GE Capital in both the ventures.

As per an agreement between SBI and GE Capital at the time of formation of SBI Cards, it was decided that whenever any party decides to exit the JV, the decision has to be on the basis of mutual understanding.

SBI, the nation's largest lender, entered credit card business in 1998 by roping GE Capital India, the consumer finance arm of US-based GE Capital.

Currently, SBI Cards' board has eight members, including three from GE Capital.



Source : Economic Times

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IDFC buys Natixis’s stake in mutual fund unit for Rs 244 crore

Financial services major IDFC has decided to buy Natixis Global Asset Management’s 25 per cent stake in IDFC Mutual Fund for over Rs 244 crore. The shares will be purchased through IDFC Financial Holding Company, a wholly-owned subsidiary of IDFC.

“The transaction is in line with the terms of the shareholders agreement that we signed with Natixis six years ago,” IDFC Managing Director and Chief Executive Officer Vikram Limaye told PTI.

IDFC Financial Holding Company holds 75 per cent stake of IDFC Asset Management Company (AMC) and IDFC AMC Trustee Company. The remaining 25 per cent stake is held by Natixis.

In December 2010, Natixis had entered into a share purchase agreement to pick stake in IDFC AMC and IDFC AMC Trustee.

As part of the agreement, there was a requirement that both shareholders would review the partnership at the end of five years.

Following a review clause in the agreement, IDFC “agreed to acquire through IDFC Financial Holding Company the balance stake (about 25 per cent) in IDFC AMC and IDFC AMC Trustee from Natixis Global Asset Management”, the financial major said in a filing. It has agreed to buy the stake for Rs 244.24 crore.

The deal, subject to regulatory approvals, is expected to conclude by the end of this month. IDFC AMC is among the top 10 firms in the mutual fund space with an assets base of Rs 57,998 crore at the end of December quarter. The turnover of the fund house stood at Rs 325 crore at the end of March 31, 2016.

Currently, there are 42 players in the mutual fund industry that manage assets worth more than Rs 17 lakh crore.

“Our agreement with Natixis had a clause which required us to distribute all our international products through Natixis only but after the conclusion of deal we will own 100 per cent of the business then we have the flexibility to think about exploring distribution and or strategic partnerships with others as well.

“Our relationship with Natixis has been very good and nothing prevents us from using the Natixis distribution,” Limaye said.

IDFC AMC, which manages a range of funds across debt and equity classes, has several new products in credit and balance fund category.

Limaye said that the company is focusing on portfolio management services (PMS) business quite aggressively.


Source : Financial Express

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IndusInd Bank confirms deal talks with MFI Bharat Financial

Mid-sized private lender IndusInd Bank today said it is in talks with multiple entities for business expansion, including the widely speculated merger of Bharat Financial Inclusion (BFI).

"...the management has been exploring strategic alternatives, and engaging in discussions from time to time with various parties, including Bharat Financial, as and when required," the bank said in a late evening exchange filing.

In the statement issued to bourses following media reports that IndusInd and BFI (formerly SKS Microfinance) are likely to announce a merger in an all-stock deal, the bank said the management has been authorised to evaluate strategic opportunities for business expansion.

It soon added that no decision has yet been made in this regard by either the board or any of the committees and also termed the media reports as "speculative".

As per the reports, the merger ratio is likely to be 10:7, wherein shareholders will get seven shares of IndusInd Bank for every 10 shares of BF. In its clarification to bourses yesterday, BF said it had been exploring various options but termed the media reports as "speculative".


Speculation regarding a deal between the two has been on for many months now and some reports had said the Hinduja Group-promoted bank may be looking at buying a minority stake in BFI. But off late the buzz has shifted to takeover

There have been a slew of deals between private sector lenders and MFIs as the former eye to expand their network in the hinterland which will help them meet the priority sector lending mandates and offer cross-sell opportunities.

In a note yesterday, Australian brokerage Macquarie had said such a merger was positive from a medium-term perspective for the bank but flagged execution as the key given the stress on MFI's books. A merger can enhance IndusInd's return on assets by up to 0.25 per cent and make it among the highest in the industry, it said.

BFI already has a business correspondent relationship with IndusInd in Karnataka for many years now. The then SKS had a tumultuous time four years ago as it first faced a repayment crisis in its largest market of Andhra Pradesh and a corporate battle over leadership which ended with the exit of founder Vikram Akula.

If the merger fructifies, it will be the third deal for IndusInd Bank, after Deutsche Bank's credit card portfolio in 2011 and RBS' diamond financing book in 2015.

Both IndusInd and BFI counters have seen a rally this year, but the stocks today corrected 0.26 per cent and 1.40 per cent respectively on the BSE.

Other banks, including IDFC Bank, Kotak and RBL, have either acquired or taken minority stakes in MFIs in past 18 months.


Source : Economic Times

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