Category: Banking & Finance

Bitcoin breaks through $55,000 as risk appetite revives

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Bitcoin extended this week’s advance, breaking through $55,000 and stirring speculation the largest cryptocurrency could test the record it set last month.

The token rose as much as 2.8% on Wednesday and was trading at about $55,600 as of 9:23 a.m. in Hong Kong. The broader Bloomberg Galaxy Crypto Index jumped to a two-week high amid a more general improvement in investor sentiment after U.S. stocks surged on Tuesday.

“It wouldn’t shock to see the price make an assault on the February high of $58,350,” Chris Weston, head of research at Pepperstone Group Ltd., wrote in a note.

Growing talk of institutional interest in Bitcoin and the possibility that U.S. stimulus checks will bolster flows into financial markets combine to lift cryptocurrencies. The digital token has risen about 600% in the past year, splitting opinion on whether a precarious bubble or bigger bull run lies ahead.

Bitcoin’s latest move higher has come as “the U.S. passed the stimulus bill, and on the back of MicroStrategy and Meitu purchasing Bitcoin,” said Annabelle Huang of crypto financial-services firm Amber Group.

“We have seen an increase in interest levels from institutional players globally,” she added. “In China, a lot of high net worth individuals have been inquiring on how to add Bitcoin to their portfolio.”

Recent trends signal digital tokens are stepping closer to mainstream finance.

For instance, JPMorgan Chase & Co. has filed to issue notes linked to a basket of crypto stocks like MicroStrategy Inc. and Nvidia Corp. Goldman Sachs Group Inc. has said it sees substantial demand from institutions as it works to restart its cryptocurrency trading desk.

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Bank of Baroda to seek investor in credit card business, says CEO, BFSI News, ET BFSI

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MUMBAI: Bank of Baroda will look for an investor in its credit card business while it also considers a potential listing for its insurance joint venture in the next 18 to 24 months, its chief executive told Reuters.

The moves flagged by Sanjiv Chadha late on Monday are part of efforts by the state-owned bank to strengthen its position in a post-pandemic world, with global consultancy firm McKinsey & Co hired to help it to execute broad transformation plans.

“We may look at getting an investor into the cards business in the next 12 months,” Chadha said of its BoB Financial Solutions operation.

The business, set up in 1994 to house the bank’s credit card portfolio, is a wholly owned subsidiary that offers more than half a million customers a range of Visa and Mastercard-linked card options.

“We are also looking to explore the possibility of listing IndiaFirst Life Insurance Co in the next 18-24 months as the business has been doing very well and we believe it has significant value,” Chadha said.

Bank of Baroda has a 44% stake in the insurance company, with Union Bank of India holding 30% and Carmel Point Investments 26%.

The previously flagged sale of Bank of Baroda’s 40% stake in India International Bank Malaysia Berhad (IIBMB) remains a work in progress, said Chadha, who took the helm in January last year.

Bank of Baroda is also looking at using excess capital from international operations to bolster its domestic business, where returns are higher.

“We’re looking at where the return is sub-optimal and are looking at redeploying that capital back to India,” Chadha said, adding that the bank has no plans to raise capital for at least a year after a Rs 4,500 crore ($617 million) capital increase this month.

While the bank plans to keep the size of its branch network largely unchanged, it does plan to set up a network of agents to offer banking services at locations other than its existing branches or ATMs, Chadha said, adding that this is unlikely to involve any dramatic change in the size of its workforce.

“We are trying to look at how we staff the bank as we move forward,” Chadha said.

“We are exploring hiring people on contract to increase feet on street, how people can work in a hybrid model or work from home, among other things.”



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Suryoday SFB raises Rs 150 crore before IPO, BFSI News, ET BFSI

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KOLKATA: Suryoday Small Finance Bank has raised Rs 150 crore from SBI Life Insurance Company and Axis Asset Management Company in a pre-IPO placement, valuing the bank at Rs 2,700 crore.

The pre-IPO placement was made at Rs 291.75 a share ahead of its likely initial public share sale that seeks to garner Rs 550-600 crore. The public issue is likely later this month.

The bank may attract 5-10% premium over the pre IPO price, people involved in the process said. Pre-IPO purchases of shares cannot be offloaded for a year.

A pre-IPO placement is a sale of a large chunk of shares ahead of an IPO. Normally, the price of equity shares at the time of public offer comes at a premium over the pre-IPO price.

It is learnt that SBI Life has invested Rs 90 crore while Axis Asset Management Co has put in Rs 60 crore.

Suryoday declined to comment, while SBI Life and Axis AMC did not respond to mails.

Suryoday would be the fourth small finance bank to come out with IPO after AU Small Finance Bank, Equitas Small Finance Bank and Ujjivan Small Finance Bank. Unlike Equitas and Ujjivan, Suryoday has no holding company.

ESAF Small Finance Bank is also preparing for its public offer, which is likely to be in next fiscal, while Utkarsh Small Finance Bank has recently sought market regulator Securities & Exchange Board of India’s approval for public share sale. Reserve Bank of India has mandated small finance banks to get listed within three years of reaching a net worth of Rs 500 crore.

The non-operating holding companies of both Equitas and Ujjivan are also listed.

The market capitalization of Equitas Holdings is Rs 3,093 crore at the end of Tuesday’s trade, while that of Equitas Small Finance Bank is Rs 6,618 crore. Market cap of Ujjivan Financial Services is Rs 2,957 crore while that for the Ujjivan Small Finance Bank is Rs 5,919 crore.

Equitas Small Finance Bank had its loan portfolio at Rs 17,373 crore at the end of December 2020, while Ujjivan Small Finance Bank had it at Rs 13,638 crore.

Suryoday’s gross loan portfolio was Rs 3,711 crore at the end of March 2020 with 76% of it constituting microloans to women borrowers. The bank also has commercial vehicle loans, affordable housing loans and loans to small and medium enterprises in its bouquet of products. It’s net interest margin for FY20 was 11.92%. Suryoday’s loan portfolio grew to around Rs 3,900 crore at the end of December.

The bank’s average collection efficiency, a measure of future asset quality, was at 82% for the month of December while it was lower in three key states — Maharashtra, Tamil Nadu and Odisha. These three states together account for 77% of its lending businesses.

The bank’s IPO includes fresh issue of up to 11.59 million equity shares and an offer for sale of up to 8.4 million equity shares. Existing investors such as International Finance Corporation, Gaja Capital, DWM (International) Mauritius, IDFC First Bank, Kotak Mahindra Life Insurance and Polaris Banyan Holding will be paring their stakes through the offer for sale, according to the draft red herring prospectus.



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PSU bank fundraising plans set for revival as bull-run lifts fortunes, BFSI News, ET BFSI

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With the markets on the upswing, public sector banks that struggled to raise funds in December are making hay in the market.

Banks are looking to raise funds to meet regulatory and provisioning requirements and to be ready for the opportunities that a likely boom in the economy may throw up in the coming months.

Bank of Baroda

State-owned Bank of Baroda has raised Rs 4,500 crore equity capital through qualified institutional placement (QIP) on Wednesday.

It allotted 55,07,95,593 equity shares to eligible qualified institutional buyers at an issue price of Rs 81.70 per share against the floor price of Rs 85.98 apiece.

Public sector banks (PSBs) are planning to raise about Rs 10,000 crore through a mix of equity and debt in the remaining two months of the current fiscal ending March to support credit pick up and meet regulatory requirements, the government had said last month.

Union Bank of India

Union Bank plans to raise between Rs 2,000 crore to Rs 3,000 crore through QIP.

The bank has shareholder permission to raise up to Rs 6,800 crore, but was planning to raise only Rs 3,000 crore as the risk appetite for public sector bank shares is still not the best. UBI plans to restrict its target to Rs 3,000 crore and possibly try another issue next fiscal year.

Private sector banks

A clutch of private sector banks also have plans to tap the market.

IDFC First IDFC First Bank’s board will meet on February 18, 2021 “to consider and approve the proposal for raising of funds by way of issue of equity shares/ other equity-linked securities. The bank sees strong strong upcoming growth opportunities.

YES Bank’s shareholders have approved a proposal for raising Rs 10,000 crore capital with the requisite majority.

December raising

Punjab National Bank raised Rs 3800 crore in December 2020 while IDBI Bank raised Rs 1400 crore in twin issues which were priced on the same day in the middle of December. Canara Bank had raised Rs 2000 crore earlier in the month.

PNB had targeted Rs 7,000 crore while IDBI Bank had aimed to raise Rs 2,000 crore. Both issues were short of their targets.

In the last few months, lenders including State Bank of India, Canara Bank and PNB have raised about Rs 50,000 crore from the market.

Bank stocks to shine?

Bank stocks were underperforming last year due to fears of a spike in non-performing assets and their annual returns were as low as 4%. However, they are recovering now.

According to analysts, the banking and finance sector seems to be the most probable candidate poised to outperform the broader markets as the pharma sector has run its course.

What RBI says

RBI Governor Shaktikanta Das has been advising banks to proactively raise capital and not wait for a difficult situation to arise due to the Covid crisis.

Besides, the government has allocated Rs 20,000 crore for capital infusion into PSBs in the current fiscal. Of this, the Finance Ministry has granted Rs 5,500 crore to Punjab & Sind Bank.

During 2019-20, the government made Rs 70,000 crore capital infusion into the PSBs to boost credit for a strong impetus to the economy.



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Reshuffle at Public Sector Banks; 14 GM and CGM Becomes Executive Directors, BFSI News, ET BFSI

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The new changes will come into effect on an immediate basis. A few of the Chief General Managers (CGM) and General Managers (GM) will take charge as an Executive Director at the same bank, whereas a few will join the other Public Sector Banks (PSB). Following are the new appointments by the cabinet committee.

1. Swarup Kumar Saha who is currently working as a Chief General Manager at Punjab National Bank, has been appointed as an Executive Director for a period of three years at the same bank.

2. Debadatta Chand who is currently working as a Chief General Manager at Punjab National Bank has been appointed as an Executive Director in Bank of Baroda.

3. K. Satyanarayana Raju who is currently working as a Chief General Manager at Bank of Baroda has been appointed as an Executive Director in Canara Bank.

4. Shri Nitesh Ranjan who is currently working as a Chief General Manager at Union Bank of India has been appointed as an Executive Director in the same bank.

5. Monika Kalia who is currently working as a Chief General Manager at Union Bank of India has been appointed as an Executive Director in Bank of India.

6. Shri Swarup Dasgupta the General Manager of Bank of India has been elevated as an Executive Director in the same bank. .

7. Shri M. Karthikeyan, currently working as a General Manager at Indian Bank has been appointed as an Executive Director in Bank of India.

8. lshraq All Khan who is currently working as a Chief General Manager at Union Bank of India has been appointed as an Executive Director in UCO Bank

9. Vivek Wahi who is currently working as a General Manager at Bank of India has been appointed as an Executive Director in Central Bank of India

10. S. Srimathy who is currently working as a Chief General Manager at Canara Bank has been appointed as an Executive Director in Indian Overseas Bank.

11. B. Vijaykumar A who is currently working as a General Manager at Bank of India has been appointed as an Executive Director in Bank of Maharashtra

12. Raghavendra Venkatasheshan Kollegal who is currently working as a General Manager at Bank of India has been appointed as an Executive Director in Punjab and Sind Bank

13. Rajeev Purl who is currently working as a Chief General Manager at Punjab National Bank has been appointed as an Executive Director at Central Bank of India.

14. lmrari Amin Siddiqul who is currently working as a General Manager at Indian Bank has been elevated as an Executive Director with the same bank.

All of these appointments are for the period of period of three years or till attaining the age of superannuation whichever is the earliest.



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Reshuffle at Public Sector Banks; 14 GM and CGM Becomes Executive Directors, BFSI News, ET BFSI

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The new changes will come into effect on an immediate basis. A few of the Chief General Managers (CGM) and General Managers (GM) will take charge as an Executive Director at the same bank, whereas a few will join the other Public Sector Banks (PSB). Following are the new appointments by the cabinet committee.

1. Swarup Kumar Saha who is currently working as a Chief General Manager at Punjab National Bank, has been appointed as an Executive Director for a period of three years at the same bank.

2. Debadatta Chand who is currently working as a Chief General Manager at Punjab National Bank has been appointed as an Executive Director in Bank of Baroda.

3. K. Satyanarayana Raju who is currently working as a Chief General Manager at Bank of Baroda has been appointed as an Executive Director in Canara Bank.

4. Shri Nitesh Ranjan who is currently working as a Chief General Manager at Union Bank of India has been appointed as an Executive Director in the same bank.

5. Monika Kalia who is currently working as a Chief General Manager at Union Bank of India has been appointed as an Executive Director in Bank of India.

6. Shri Swarup Dasgupta the General Manager of Bank of India has been elevated as an Executive Director in the same bank. .

7. Shri M. Karthikeyan, currently working as a General Manager at Indian Bank has been appointed as an Executive Director in Bank of India.

8. lshraq All Khan who is currently working as a Chief General Manager at Union Bank of India has been appointed as an Executive Director in UCO Bank

9. Vivek Wahi who is currently working as a General Manager at Bank of India has been appointed as an Executive Director in Central Bank of India

10. S. Srimathy who is currently working as a Chief General Manager at Canara Bank has been appointed as an Executive Director in Indian Overseas Bank.

11. B. Vijaykumar A who is currently working as a General Manager at Bank of India has been appointed as an Executive Director in Bank of Maharashtra

12. Raghavendra Venkatasheshan Kollegal who is currently working as a General Manager at Bank of India has been appointed as an Executive Director in Punjab and Sind Bank

13. Rajeev Purl who is currently working as a Chief General Manager at Punjab National Bank has been appointed as an Executive Director at Central Bank of India.

14. lmrari Amin Siddiqul who is currently working as a General Manager at Indian Bank has been elevated as an Executive Director with the same bank.

All of these appointments are for the period of period of three years or till attaining the age of superannuation whichever is the earliest.

In 2020-21, the government infused Rs 5,500 crore as fresh capital in PSBs through non-interest bearing special securities.



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14 CGMs/GMs elevated as Executive Directors in various public sector banks

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The Appointments Committee of the Cabinet (ACC) on Tuesday approved the elevation of 14 Chief General Managers/ General Managers to the post of Executive Director in various public sector banks (PSBs).

This move comes nearly six months after the Banks Board Bureau recommended 13 names to be appointed as EDs in various banks.

While Swarup Kumar Saha, Chief General Manager, Punjab National Bank, has been appointed as Executive Director in Punjab National Bank for a period of three years, Debadatta Chand, who is currently Chief General Manager, Punjab National Bank has been appointed as Executive Director in Bank of Baroda for a period of three years.

K. Satyanarayana Raju, who is currently Chief General Manager, Bank of Baroda, has been appointed as Executive Director in Canara Bank. Nitesh Ranjan, Chief General Manager, Union Bank of India has been appointed as Executive Director in Union Bank of India for a period of three years.

The ACC has also approved the appointment of Monika Kalia, Chief General Manager, Union Bank of India, as Executive Director in Bank of India for a period of three years. Swarup Dasgupta , who is currently General Manager, Bank of India, has been appointed as Executive Director in Bank of India for a period of three years.

Also, M. Karthikeyan, who is currently General Manager, Indian Bank has been appointed as Executive Director in Bank of India for a period of three years. lshraq All Khan, Chief General Manager, Union Bank of India has been appointed as Executive Director in UCO Bank.

Vivek Wahi, who is now General Manager, Bank of India has been appointed as Executive Director in Central Bank of India for a period of three years.

While S. Srimathy, who is now Chief General Manager, Canara Bank, has been appointed as Executive Director in Indian Overseas Bank for a period of three years, B. Vijaykumar, who is now General Manager, Bank of India, has been appointed as Executive Director in Bank of Maharashtra.

Raghavendra Venkatasheshan Kollegal, who is currently General Manager, Bank of India has been appointed as Executive Director in Punjab and Sind Bank. While Rajeev Puri, who is now Chief General Manager, Punjab National Bank has been appointed as Executive Director, Central Bank of India, Imran Amin Siddiqui, who is now General Manager, Indian Bank has been elevated as Executive Director, Indian Bank for a period of three years

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Indian Bank to raise up to ₹4,000 cr

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State-owned Indian Bank on Tuesday said its committee of directors has given approval for raising up to ₹4,000 crore through share sale.

Shareholders of the bank on March 2 had given approval for the capital raising.

The Committee of Directors in its meeting held on March 9, 2021, has accorded approval for raising of equity capital of the bank aggregating up to ₹4,000 crore (including premium) through qualified institutions placement (QIP) in one or more tranches, Indian Bank said in a regulatory filing.

The fund raising would be subject to all statutory and regulatory approvals, it said.

Following the QIP, the government holding in the bank will come down from the existing level. The government as the promoter of the bank holds 88.06 per cent in the Chennai-headquartered Indian Bank.

The lender said it is required to increase its public shareholding to at least 25 per cent within a period of three years from August 3, 2018.

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Former CBoI chief Pallav Mohapatra appointed MD and CEO of Arcil

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Asset Reconstruction Company (India) Ltd (Arcil) on Tuesday announced the appointment of Pallav Mohapatra as its Chief Executive Officer and Managing Director.

Prior to the appointment, Mohapatra was the MD and CEO of Central Bank of India (CBoI) from September 21, 2018, to February 28, 2021. Before being elevated as MD and CEO of CBoI, he was Deputy Managing Director, Stressed Assets Management Group, State Bank of India.

Vinayak Bahuguna headed Arcil as MD and CEO for five years till June 2020.

Anil Gorthy, Chairman, Arcil, in a statement, said Mohapatra brings with him years of seasoned banking insight and a wealth of experience in the industry, particularly management of stressed assets.

Arcil, which was set up in 2002, currently has assets under management (in non-performing loans) of ₹12,000 crore, according to the statement.

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Low bad loans may help Utkarsh Small Fin Bank look good on IPO Charts, BFSI News, ET BFSI

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Utkarsh Small Finance Bank which has filed preliminary papers with markets regulator Sebi to raise Rs 1,350 crore through an initial share sale, has the lowest bad loans ratio among peers.

The bank’s deposits and disbursements grew at a CAGR of 54.48 per cent and 33.66 per cent, respectively during FY18-20.

The lender’s gross loan portfolio has grown at 44% CAGR since its start in FY18.

Loan book has remained stagnant in the last six months till September due to the pandemic, in line with its peers such as AU Small Finance Bank Ltd and Equitas Small Finance Bank Ltd.

Its gross non-performing assets are down to 0.71% as of March 2020 from 1.85% two years before that, but up from 0.64% in September 2020. About Rs 26.9 crore loans were not labelled as bad due to the Covid moratorium.

Collection efficiency

Collection efficiency is down with the bank able to collect 79.28% of its dues as against 90-95% rate before the pandemic.

The bank has the lowest level of bad loans among peers and is better poised to show faster improvement once the pandemic ends.

Deposits

The bank’s deposits grew by 14% during April-September with the share of its low-cost CASA deposits going up to 14.46% as of September, which will help in margins.

While the portfolio is dominated by microfinance assets, growth in newer segments has risen and the bank’s main focus is to diversify the asset portfolio.

The issue

The Initial Public Offer (IPO) comprises a fresh issue of equity shares worth Rs 750 crore and an offer of sale to the tune of Rs 600 crore by promoter Utkarsh Coreinvest Ltd, according to the Draft Red Herring Prospectus (DRHP) filed with Sebi.

The Varanasi-headquartered lender said it may also consider raising Rs 250 crore through a pre-IPO placement which would be in consultation with the lead managers to the issue.

The utilisation

The Proceeds from the fresh issue would be utilised to augment the Tier 1 capital base to meet future capital requirements.

As on September 30, 2020, the small finance bank across 528 banking outlets served 2.74 million customers, majorly located in rural and semi-urban areas in Bihar, Uttar Pradesh and Jharkhand that have a significant untapped market.



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