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IDBI Bank to sell non-core assets

21 February, 2017

IDBI Bank Ltd plans to sell some non-core investments, as the state-run lender grapples with bad loans and mounting losses.

The bank’s board has given in-principle approval for the stake sales, the lender said in a filing to the stock exchanges. Each transaction will separately need final approval, it added.

The sale would help boost IDBI Bank’s capital requirements as mandated under the Basel-III norms with March 2017 as deadline.

Earlier this month, the bank reported its net loss widened to Rs 2,254.96 crore for the three months ended December 2016 from Rs 2,183.68 crore a year earlier.

Its gross non-performing assets (NPAs) surged 17% to Rs 35,245.33 crore at the end of December.

Besides a fund infusion by the government and privatisation, selling non-core assets is one way for the bank to shore up its capital position and strengthen its balance sheet.

Finance Minister Arun Jaitley had last year said in the budget for 2016-17 that the government was open to lowering its stake in IDBI Bank to below 50% through a strategic sale. Soon thereafter, IDBI Bank had said that the UK’s CDC Group and Singapore sovereign wealth fund GIC had shown interest in buying a stake in the lender. The government currently holds almost 74% of IDBI Bank.

IDBI Bank didn’t specify what non-core investments it plans to sell. The lender holds minority stakes in National Securities Depository Ltd, NSDL e-Governance Infrastructure Ltd and Biotech Consortium India Ltd, according to its annual report for 2015-16.

Its subsidiaries include IDBI Asset Management Ltd, IDBI Capital Markets Ltd and IDBI Intech Ltd. It also has a joint venture—IDBI Federal Life Insurance Company Ltd.

Besides, it owns a 1.5% stake in the National Stock Exchange, according to the bourse’s website. The bank had last year pared its stake in NSE.

Meanwhile, in a separate filing, the bank said it has postponed plans to raise funds via a preferential issue of shares or some other method.

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IDBI Bank to sell non-core assets

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