UTI AMC gets Sebi nod for initial public offering to raise Rs 3,000 cr

The IPO of the country's largest AMC in terms of total AUM comprises sale of 38,987,081 equity shares by existing shareholders.

UTI Asset Management Company (AMC) has received markets regulator Sebi’s go-ahead to raise a little over Rs 3,000 crore through its initial public offering (IPO).
The IPO of the country’s largest AMC in terms of total assets under management (AUM) comprises sale of 38,987,081 equity shares by existing shareholders, according to the draft red herring prospectus (DRHP).

State Bank of India (SBI), Life Insurance Corporation (LIC), and Bank of Baroda (BoB) are offering to sell 10,459,949 shares each, while Punjab National Bank (PNB) and T Rowe Price International are planning to offload 3,803,617 shares each. The public offer is expected to raise a little over Rs 3,000 crore, market sources said.

UTI AMC, which had filed draft papers with Sebi in December 2019, obtained its observations on June 16, latest update with the markets watchdog showed.

Sebi’s observations are necessary for any company to launch public issues, including initial share-sale, follow-on public offer and rights issue.

SBI, LIC, PNB, and BoB hold 18.5 per cent stake each in UTI AMC. The US-based T Rowe Price holds 26 per cent stake in the company.

Kotak Mahindra Capital, Axis Capital, Citibank, DSP Merrill Lynch, ICICI Securities, JM Financial, and SBI Capital Markets are the bookrunning lead managers to the offer.

UV Asset Reconstruction permitted to sell Aircel's spectrum rights

The order is on the resolution plan for Aircel and its subsidiaries Dishnet Wireless and Aircel Cellular.

Asset management company UV Asset Reconstruction Company (UVARCL) has been permitted to sell the right to use the spectrum held by Aircel in the 1800 and 2100 bands as part of the telecom company’s resolution plan the National Company Law Tribunal (NCLT) has cleared.

The order is on the resolution plan for Aircel and its subsidiaries Dishnet Wireless and Aircel Cellular. The outstanding debt of the three companies is around Rs 58,760 crore. Financial creditors will have to take a considerable haircut in this.

According to the NCLT order, UVARCL has proposed to pay Rs 19,600 crore, of which around Rs 6,630 crore is by way of ZOCDs (zero-coupon optionally convertible debentures) and the balance of Rs 12,970 crore is paid upfront.

It was stated that UVARCL will buy equity by paying Rs 11 crore and the balance through ways such as asset monetisation, for which selling the right to use spectrum is the most feasible option; selling equipment, real estate, towers, and fibre assets; proceeds from realising claims; proceeds from the benefit of carry-forward losses; and unabsorbed depreciation.

The NCLT has endorsed the resolution professional’s proposal granting the sale.

As part of the order, UVARCL will also be able to sell optical fibre of 14,500 km and some equipment, most of which has gone obsolete. It has also been allowed to lease the tower infrastructure, in which 30 per cent is based on 3G technology.

Banks extending emergency loans to salaried, entrepreneurs after rate cut

However, most are extending it to their existing customers only.

With the Reserve Bank of India cutting benchmark rates sharply and also allowing banks to defer EMIs, banks are slowing gearing up to lend to various sectors, including the salaried and entrepreneurs. And with the loss/fall in income, and even jobs coming under threat, there would be many who would be seeking such loans to navigate through these tough times. Adhil Shetty, CEO, Bankbazaar.com, says: “With pandemic-related job losses and the possibility of a recession looming, banks are worried the default rate on unsecured loans could skyrocket. Despite this, many have indicated their willingness to help with special emergency loans.”

For the salaried: Padmaja Chunduru, managing director, Indian Bank, says: “We have launched products across categories, not just for corporate, or MSME, but even emergency salary loans, loans for pensioners and self-help groups.” The bank’s retail salary loan is called IND-COV Emergency Salary Loan. Under this scheme, you can avail of a loan up to an amount equivalent to 20 times your latest monthly gross salary up to Rs 2 lakh. To be eligible for the loan, you need to have a salary account with the bank. In case you are a home loan borrower of the bank, you can avail of this loan, even if you do not a salary account.

Adds Chunduru: “Even if you don’t have an existing banking relationship, you can avail the emergency salary loan, if you have a guarantor for the same.” A guarantor could either be your spouse or an employee belonging to your existing organisation. There is no processing fee. The interest being charged is 9.50 per cent for 36 months, including a holiday period of six months. Even Bank of India is extending loans to retail customers but in the form of a personal loan. The eligibility: Three times of last drawn salary up to Rs 5 lakh.

Bank of Baroda underreported bad loans by Rs 5,250 cr in FY19: RBI report

In recent months, there have been several instances of under-reporting of bad loans by lenders.

Government-owned Bank of Baroda has reported a Rs 5,250-crore divergence in the calculation of bad loans for the 2018-19 financial year.

The Reserve Bank of India's (RBI's) assessment of its gross non-performing assets (NPAs) for the year is Rs 75,174 crore. Against this, the bank had reported GNPAs of Rs 69,924 crore, it told the BSE exchange. All figures are for the recently amalgamated entity, wherein Vijaya Bank and Dena Bank were merged with BoB.

After the disclosure, BoB's share price fell by 3.3 per cent to Rs 98.9 on Wednesday. Net NPAs assessed by the RBI for FY19 are Rs 29,045 crore, as compared to BoB's own calculation of Rs 23,795 crore. The provisioning BoB had made on its balance sheet for NPAs were Rs 46,001 crore for the year; RBI says this has to be Rs 50,091 crore, an additional Rs 4,090 crore.

The bank has said of this Rs 4,090 crore divergence, it had already made a provision of Rs 1,475 crore in the current financial year. Leaving an additional impact of Rs 2,615 crore. Consequently, the adjusted net loss for FY19 is Rs 10,998 crore, in place of the earlier reported net loss of Rs 8,339 crore.

In recent months, there have been several instances of under-reporting of bad loans by lenders, prompting regulatory action by the central bank.

Last month, the capital markets regulator, Sebi, had said disclosures in respect of divergence and provisioning are in the nature of material events and, hence, necessitate immediate disclosure.

Further, this information is price-sensitive, requiring prompt disclosure by a listed entity. It has asked banks listed on the stock exchanges to make disclosure of divergences and provisioning beyond a specified threshold as soon as reasonably possible and not later than 24 hours upon receipt of RBI’s Final Risk Assessment Report.

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Bank of Baroda plans to raise capital up to Rs 3,000 cr via tier-II bonds

BOB is amongst the better capitalised PSBs, with a common equity tier I capital of 8.49% in 1QFY20.

Public sector lender Bank of Baroda (BoB) plans to raise capital up to Rs 3,000 crore through tier-II bonds for meeting capital adequacy norms for the merged entity (integration of Vijaya and Dena Bank with BoB).

Rating agency India Ratings has assigned “AAA” stable rating to proposed bond offering by the PSB. Ratings for state-owned lender factors in large franchise, a pan-India presence, adequate funding base and liquidity. BOB is amongst the better capitalised PSBs, with a common equity tier I capital of 8.49 per cent in 1QFY20 (June 2019) and a capital adequacy ratio of 11.50 per cent.

The amalgamation has led to dilution of capital ratios as expected. However, the recent announcement of capital infusion of Rs 7,000 crore should add to the bank’s capital buffers (CET I could increase by about 120 basis points). The capital available with the merged entity will be sufficient to support its targeted level of growth for FY20, rating agency said in a statement.

Meanwhile, the agency has flagged concern over appointment of New Managing Director and Chief Executive (MD&CEO). P S Jayakumar has been heading BOB as MD& CEO since October 2015.

ALSO READ: Customer to IT integration, banks to follow BoB's footsteps during merger

While he was initially appointed for a three-year term, he received a one-year extension from the government in October 2018. His term will end on 12 October 2019. The Banks Board Bureau has invited applications for the positions of MD & CEO of four PSBs in August 2019, which includes BOB.

The limited clarity regarding the appointment of the new MD and CEO could have a bearing on the bank’s near-to-medium term performance, especially since the amalgamation has become effective recently.

BOB maintained a relatively high provision coverage ratio (PCR) of 64.1 per cent on an amalgamated basis in 1QFY20 (excluding technical write-offs). The ratio, however, declined from 67.6 per cent in 4QFY19 (on pre-amalgamation basis) due to the amalgamation. While slippages declined on a year-on-year basis in FY19, it will remain a key monitorable in the near term.

BOB’s amalgamation with Dena Bank and Vijaya Bank became effective from 1 April 2019. The completion of the integration will take another 15-16 months, with the integration of the IT systems requiring the longest time.

Public sector banks merger: Modi govt to announce big bang plan soon

Finance ministry has called a meeting with chief executives of ten public sector banks, on Friday.

The National Democratic Alliance (NDA) government has readied its mega plan for merging multiple set of public sector banks (PSB) and is set to make an announcement anytime soon, according to multiple sources.

The department of financial services in the finance ministry has called a meeting with chief executives of ten public sector banks, which are seen as top contenders for merger, on Friday.

The banks invited for consultations on Friday are: Union Bank of India, Canara Bank, Punjab National Bank, United Bank, Oriental Bank of Commerce, United Bank, Allahabad Bank, Corporation Bank, Syndicate Bank and Andhra Bank.

“The PSB merger will be announced anytime soon as part of the government's reforms agenda,” said a top source familiar with the development.

Punjab National Bank, Union Bank of India and Canara Bank might be banks which will be subsuming other PSBs.

“It looks like PNB will be merged with three more banks, including Andhra Bank and Oriental Bank of Commerce,” another source said.

In her press briefings recently, Finance Minister Nirmala Sitharaman has been dropping hints of two more set of reform measures that the government is set to announce.

For the first time, under the Narendra Modi government’s tenure, two set of PSB mergers took place — One, five associate banks and Bharatiya Mahila Bank merged with State Bank of India (April 2017), and two, Dena Bank, Vijaya Bank merged with Bank of Baroda which came into effect from April 1 this year.

The central government has to consult the RBI before formulating a plan for PSB merger, according to the Banking Companies (Acquisition and Transfer of Undertakings) Acts of 1970 and 1980.

Sources said the central government has already consulted the RBI regarding its merger plans earlier this year.

The plan for PSB merger has to be approved by a group of ministers, known as the alternative mechanism. Sitharaman and commerce and industry minister Piyush Goyal are a part of it.

Business Standard

SBI, Bank of Baroda, PNB: Here's how you can make money in PSU bank stocks

SBI has a strong relevance of 200-weekly moving average (WMA), as it has never been decisively broken in the last one year.

Business Standard : The benchmark indices witnessed a sharp rally, rising over 3 per cent in the last week. The S&P BSE Sensex rose 1353 points, or 3.65 per cent, to close at 38,024, hile the Nifty50 rose 391 points, or 3.54 per cent, to end at 11,246.

The overall trend was spearheaded by Nifty Bank, which soared 1620 points, or 5.80 per cent. The index witnessed strong buying on every new lifetime high levels. Along with private banks, investors showed keen interest PSU banks started showing the keen interest of investors with a jump in volumes and a change in trend.

NIFTY PSU BANK (NIFTYPSUBA): The index needs to strongly hold above 2950 levels to maintain the positive sentiment. Any breach on the same may trigger a sell-off. A bigger move is expected only above 3,200. The recent rally from Rs 2700 to Rs 3000 levels has been a straight rise without any confirmed breakout. The the last six months, the Nifty PSU Bank index has been hovering around its 200-days moving average (DMA) as per daily chart.

STATE BANK OF INDIA (SBI): The stock has a strong relevance of 200-weekly moving average (WMA), as it has never been decisively broken in the last one year. The formation resembles a symmetrical triangle with immediate trendline resistance at Rs 310 level. The 200 WMA is placed at Rs 260, which acts as a strong support from a medium-term perspective. The weekly MACD has just risen above zero line, indicating a possible upside. A firm rally above Rs 310 will open doors for Rs 340 and Rs 360 levels.

BANK OF BARODA (BANKBARODA): The bigger picture for the stock reveals negative sentiment on the chart. The falling channel pattern indicates selling pressure in the range of Rs 120 – Rs 125, its upper falling trend line. The 200-days moving average (DMA) coincides around the same range, placed at Rs 119.30 level. However, it has a support around Rs 112, a level where 100DMA and 50DMA in a process to make positive crossover. If it happens, the stock may cross its pressure range and head towards Rs 140 and Rs 150 level.

PUNJAB NATIONAL BANK (PNB): The current rally towards Rs 86 level is due to the strong buying seen around Rs 68, which has become a support for a-near term trading, technical chart suggests. The golden crossover of 50DMA and 200DMA has further strengthened the upward move. A possible crossover of 100DMA with 200DMA may even lead to a stronger rally in the near future. The immediate support comes in the range of Rs 75 – Rs 78 and the trend recommends a move towards Rs 94 and Rs 105 level.