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IDBI Bank to sell non-core assets

By Ankit Doshi

  • 21 Feb 2017
IDBI Bank to sell non-core assets

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.

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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.

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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.

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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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