March 2016
Issue No. 4
Corporate Banking
  1. Four banks plan to sell Kingfisher Airlines’ assets to ARCs

    To recover part of their dues, as many as four banks are considering the sale of assets belonging to Kingfisher Airlines to asset reconstruction companies (ARCs). This move is the latest in the saga of 17 banks – led by the State Bank of India – trying to recover Rs 6,963 crore debt due from the defunct airline company.

    Earlier this week, Punjab National Bank (PNB), one of the banks of the consortium, declared Kingfisher Airlines along with its guarantors Vijay Mallya and United Breweries Holdings as willful defaulters. PNB, after United Bank of India and State Bank of India, is the third public sector lender to make such a declaration. As per RBI guidelines, once declared as willful defaulters, no additional facilities will be granted to these borrowers by any bank or financial institution.

  2. ICICI Bank plans to raise up to Rs 50,000 crore from bonds

    Private sector lender ICICI Bank plans to raise up to Rs 50,000 crore from bonds in tranches to fund affordable housing and infrastructure projects. The bank intends to seek the Committee of Executive Directors’ (COED) approval to raise funds through issuance of long-term debentures on a private placement basis. The proposal would be considered within a period of 10 days commencing from February 18, it added.

    The bank has taken a shareholders’ approval at its Annual General Meeting held on June 29, 2015, for borrowing Rs 50,000 crore by way of securities including but not limited to bonds and non-convertible debentures on a private placement basis.

  3. Canada Pension Plan buys stake in Kotak Mahindra Bank

    Japan’s Sumitomo Mitsui Banking Corporation sold a large part of its stake in Kotak Mahindra Bank Ltd to Canada Pension Plan Investment Board (CPPIB) that manages pension fund assets worth 268.6 billion Canadian dollars (US$203.09 billion).

    Sumitomo was looking to sell almost half its stake in the private sector lender for around $300 million (Rs 2,050 crore). The Canadian pension fund has bought 18.1 million shares (approximately 1 per cent stake of the firm) at Rs 636.25 per share, aggregating to Rs 1,151.60 crore, according to data available with the stock exchanges.

    Citigroup Inc. managed the share sale programme. After the transaction, Sumitomo’s stake in Kotak Mahindra Bank will fall to around 1.79 per cent.

  4. Global investors put more capital in Bandhan Bank

    Singapore’s sovereign wealth fund GIC and International Finance Corporation have increased their stakes in Bandhan Bank, which is into its sixth month of operation.

    The global investors, along with state-run Small Industries Development Bank of India, put in Rs 482 crore in Bandhan, taking the entity’s total capital to Rs 3,052 crore, more than six times the minimum Rs 500 crore capital norm for new private banks.

    With these investments, Bandhan may not need to raise additional capital in the next couple of years as it increases lending to retail and medium, small and micro enterprises.

  5. ICICI Bank initiates modifications to $600 mn Bahrain bonds

    Close on the heels of the lowering of the sovereign rating of Gulf nations, private sector ICICI Bank began modifications to the structure of all the issuances amounting to about USD 600 million done from Bahrain.

    Following the rating action on Bahrain, the bonds issued by ICICI Bank from Bahrain branch may be subject to rating action by S&P, it said. ICICI Bank has outstanding bonds aggregating approximately $600 million issued from its Bahrain branch.