Tag: union bank

Union Bank hiring young engineers; average age of employees is 38, BFSI News, ET BFSI

Banking & Finance

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-By Ishwari ChavanWith the onset of the digital age, banking is not only about finance anymore. Rapid developments in technology are making banks look like tech firms, where one technology is replaced by a newer one in a matter of time.

These developments have made it imperative for the banking sector to hire employees who can adapt to these technology changes swiftly. The “tech-savvy young”, in the words of Raj Kiran Rai, CEO, Union Bank, is where the banks are looking at.

Union Bank MD Rajkiran Rai

Tech-savvy workforce

Banks are heavily recruiting the younger population while skilling and reskilling them. Rai says that the average age of his employees has come down to 38. He added that the “tech-savvy” young can be easily skilled and reskilled through e-learning modules that are being introduced. Prioritising the employees who can read and analyse large data over traditional number-crunching can be increasingly seen as a pattern.

Rai said, “ Actually even though it is not planned, we are recruiting only engineers now. About 60-70% of the officers joining us are only engineers. This is not a planned thing but then it is happening. In fact, if you interact with these young officers, one out of every two will turn out to be an engineer. So that is the position.”

“When we look at the public sector bankers, we think of an aged banker. It is no longer the case. The average age of my employees has come down to 38 years now. So we have quite a young population. We don’t find any problem in skilling and reskilling them,” he said.

Rai says that the average age of his employees has come down to 38.
Rai says that the average age of his employees has come down to 38.

Millennials dominate

The average age of public sector bank employees has been above 40. These jobs are now being infiltrated by especially millennials who are born between 1986-1991. This pattern is likely to gain pace in the coming years as banks shift their focus to tech and interpersonal skills.

Banks have already started investing heavily in critical thinking, collaboration, communication and creative thinking aspects for their growth. And they believe that the younger generation makes a suitable fit.

Furthermore, millennials are believed to be more socially and environmentally conscious.

With the growing concern of banks about their ethical status, they are increasingly focusing on non-financial factors like Environmental, Social, and Governance. The young are thus looked at as worth investing in.

Globally, banks like DBS are far more aggressive in hiring candidates with diverse skills such as psychology, philosophy, history and ethnography, etc along with the engineers.

Also read: How PSU banks are catching up in the digital world



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IOB asks Union Bank to buy its stake in Malaysian bank, BFSI News, ET BFSI

Banking & Finance

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Indian Overseas Bank (IOB) has asked the Union Bank of India to buy its 35 per cent holding in India International Bank, Malaysia, a top IOB official said on Tuesday.

The India International Bank was originally a three-way joint venture between the Bank of Baroda (40 per cent stake), the IOB (35 per cent) and Andhra Bank (25 per cent). The Andhra Bank was taken over by the Union Bank of India as a part of the megabank merger scheme last year.

“We have asked Union Bank of India to buy our stakes. The valuation exercise is going on,” IOB Managing Director & CEO Partha Pratim Sengupta told reporters.

According to him, the IOB had decided to exit the Malaysian joint venture as part of its plan to come out of the Reserve Bank of India‘s (RBI) Prompt and Corrective Action (PCA) fold.

Though Sengupta said the IOB is expecting to be out of the PCA fold as it fulfills the RBI’s conditions, the decision to exit the India International Bank continues to hold.

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IOB asks Union Bank to buy its stake in Malaysian bank, BFSI News, ET BFSI

Banking & Finance

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Indian Overseas Bank (IOB) has asked the Union Bank of India to buy its 35 per cent holding in India International Bank, Malaysia, a top IOB official said on Tuesday.

The India International Bank was originally a three-way joint venture between the Bank of Baroda (40 per cent stake), the IOB (35 per cent) and Andhra Bank (25 per cent). The Andhra Bank was taken over by the Union Bank of India as a part of the megabank merger scheme last year.

“We have asked Union Bank of India to buy our stakes. The valuation exercise is going on,” IOB Managing Director & CEO Partha Pratim Sengupta told reporters.

According to him, the IOB had decided to exit the Malaysian joint venture as part of its plan to come out of the Reserve Bank of India‘s (RBI) Prompt and Corrective Action (PCA) fold.

Though Sengupta said the IOB is expecting to be out of the PCA fold as it fulfills the RBI’s conditions, the decision to exit the India International Bank continues to hold.

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IOB asks Union Bank to buy its stake in Malaysian bank, BFSI News, ET BFSI

Banking & Finance

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Indian Overseas Bank (IOB) has asked the Union Bank of India to buy its 35 per cent holding in India International Bank, Malaysia, a top IOB official said on Tuesday.

The India International Bank was originally a three-way joint venture between the Bank of Baroda (40 per cent stake), the IOB (35 per cent) and Andhra Bank (25 per cent). The Andhra Bank was taken over by the Union Bank of India as a part of the megabank merger scheme last year.

“We have asked Union Bank of India to buy our stakes. The valuation exercise is going on,” IOB Managing Director & CEO Partha Pratim Sengupta told reporters.

According to him, the IOB had decided to exit the Malaysian joint venture as part of its plan to come out of the Reserve Bank of India‘s (RBI) Prompt and Corrective Action (PCA) fold.

Though Sengupta said the IOB is expecting to be out of the PCA fold as it fulfills the RBI’s conditions, the decision to exit the India International Bank continues to hold.

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Venugopal Dhoot moves NCLAT to set aside NCLT order on Videocon, BFSI News, ET BFSI

Banking & Finance

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Venugopal Dhoot, has moved the National Company Law Appellate Tribunal (NCLAT) against the June 8, 2021 order of the National Company Law Tribunal (NCLT) Mumbai approving the bid of Vedanta Group company Twinstar Technologies Limited to acquire the bankrupt Videocon Industries Limited for ₹2,962 crores.

Dhoot has petitioned NCLAT to set aside the ‘Resolution Plan’ approved by the NCLT and allow seeking of fresh resolution plans for all assets of the group, including all foreign oil and gas assets.

In his petition, he listed three respondents filed at the National Company Law Appellate Tribunal (NCLAT) on Saturday—Videocon Group resolution professional Abhijit Guhathakurta, the committee of creditors (CoC), and Twin Star Technologies

The petition also requested NCLAT to direct the Committee of Creditors to consider the ‘Resolution Plan’ submitted by him under Section 12A of the Insolvency and Bankruptcy Code (IBC) that entails a “zero haircut” (involving no loss to the banks/ creditors).

Dhoot stated in his petition that the resolution professional had violated Sections 30(2) and 61(3)(ii) of the IBC. He accused the resolution professional of withholding information in the tender form and eroding the value of the company by closing it down.

Commercial wisdom exercised by lenders is “arbitrary and irrational and does not reflect any applicability of mind by rejecting a proposal which was 10 times higher and submitted at an early stage of the process”, he said.

Dhoot further added, “The liquidation value of these oil assets is not less than ₹15,000 crore. As such RP (resolution professional)/ COC (committee of creditors) has no authority to sell oil assets and consumer durables separately. If the RP had sold oil and consumer durables together, he would have got minimum of ₹25,000 crores against a loan of ₹49,000 crores (₹29,000 crores of consumer durables business and ₹20,000 crores of oil assets)”

“Thus recovery would have been around 50% and not 5% as seen today,” he added.

There are 35 financial creditors of Videocon, of which 19 major creditors include SBI, Union Bank, IDBI, Central Bank, BOB, and ICICI Bank who approved the resolution at a December vote. This implied a 95.85% haircut. But three minority shareholders, Bank of Maharashtra, SIDBI, and IFCI rejected the resolution on the ground of low resolution and filed an appeal in NCLAT.



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Videocon resolution may be back to square one after NCLAT stay, BFSI News, ET BFSI

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After NCLAT stayed the order of the NCLT of Mumbai Bench, the process of Videocon Industries’s liquidation case may start all over again. Legal experts also believe that SBI-led creditors may not do anything but the bid winner Anil Agarwal’s Twin Star may appeal in Supreme Court against the NCLAT order.

“As of now, NCLAT has stayed the order. The creditors (appellant) were possibly challenging the entire bidding approved by NCLT on the grounds that some procedures might not have been followed, opinions not being considered. Now there are high chances that the entire process can restart,” said Vikas Tomar, Partner, Indian Law Partners.

There are 35 financial creditors of Videocon, of which 19 major creditors, including SBI, Union Bank, IDBI, Central Bank, BOB and ICICI Bank approved the resolution, which includes the 95.85% haircut. But three minority shareholders, Bank of Maharashtra, SIDBI and IFCI rejected the resolution on the ground of low resolution and filed an appeal in NCLAT.

Large versus Minority Creditors versus Bidder

The plea of minority shareholders is heard and the whole case will move in a direction to get more benefits for the financial creditors.

“Banks are normally prepared to take a 60-70 per cent haircut on payments if an insolvency process is initiated. The bid was also rejected on the grounds that they should be compensated upfront and in cash rather than through NCDs. Accepting this bid will just increase the banks’ losses, and now their only option is to call for bids from interested parties,” said Sonam Chandwani. Managing Partners, KS Legal and Associates.

The main ground of the minority shareholders was the low resolution amount.

“The large financial creditors like SBI and others may prefer to keep quiet and wait for the court to do its process. But there are high chances that Anil Agarwal’s Twin Star Technologies may appeal in Supreme Court against NCLAT order,” said a legal expert who did not want to be identified.

There were 11 bidders for Videocon but only three had bid for the whole Videocon’s group assets. The majority of them had bid for only a particular division of the company. Hence on one side, there is a big hope that minority shareholders will recover more, but on the other side there the whole process may take a long time.

The Videocon resolution case has been one of the most dramatic in the IBC process. Starting from Chanda Kochchar, former MD and CEO, ICICI Bank losing her job and facing trials with investigative agencies for irregularities in the giving loans to the group, to the fresh challenge to the resolution process, it has been a bumpy road.



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Union Bank board gives nod for fund-raising

Banking & Finance

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Union Bank of India’s board of directors on Wednesday approved fund raising, including via equity and bonds, of up to ₹9,700 crore.

Within the overall limit of ₹9,700 crore, the public sector bank is planning to raise up to ₹3,500 crore via equity and up to ₹6,200 crore via bonds (Additional Tier 1 and/or Tier 2), according to a regulatory filing.

The raising of equity capital will be through one or more routes, including follow-on public offer, rights issue, private placement (including Qualified Institutions Placement) and preferential allotment to the Government of India and/or other institutions, as per the filing.

The bank will be obtaining shareholders’ approval for the capital plan at the 19th Annual General Meeting (AGM) on August 10.

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Union Bank of India reports Rs 1,330-crore net as asset quality improves

Personal Finance

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Rajkiran Rai G, MD and CEO, said: “There has not been any significant impact on the recovery in April and May, the impact should be in the range of 2-3%. We are expecting a credit growth of 8-10% in FY22.”

Union Bank of India on Monday reported a net profit of Rs 1,330 crore for the March quarter (Q4FY21), compared with a loss of Rs 7,157 crore during the same quarter last year. The lender was back in the black due to a growth in other income and lower provisioning.

Total provisions declined 64% year-on-year (y-o-y) and 16% sequentially to Rs 3,850 crore. The net interest income (NII) declined 9% y-o-y to Rs 5,403 crore.

The non-interest income grew 50% quarter-on-quarter (q-o-q) and 23% y-o-y to Rs 4,551 crore, mainly on account of recovery in the written-off accounts. Overall, the net profit for FY21 stood at Rs 2,906 crore, compared to a net loss of Rs 6,613 crore during FY20.

Rajkiran Rai G, MD and CEO, said: “There has not been any significant impact on the recovery in April and May, the impact should be in the range of 2-3%. We are expecting a credit growth of 8-10% in FY22.”

The net interest margins (NIM) improved 55 basis point (bps) y-o-y and 58 bps sequentially to 2.4%.

The asset quality improved during the quarter under review. The gross non-performing assets (NPAs) ratio improved 154 basis points to 13.74%, compared to reported pro forma gross NPAs of 15.28% in the previous quarter. Similarly, the net NPAs ratio improved 40 basis points to 4.62%, from 5.02% in the December quarter.

“The bank expects a recovery of Rs 13,000 crore during FY22,” Rai said. The lender has also identified accounts worth Rs 7,800 crore for sending to National Asset Reconstruction Company (NARCL). Overall, the banking industry may have identified accounts close to Rs 89,000 crore for sending to NARCL in phase 1, Rai, who is also chairman of the Indian Banks’ Association, said.

Advances declined 2% y-o-y to Rs 6.5 lakh crore. Retail lending portfolio, however, increased 10% y-o-y to Rs 1.25 lakh crore. Advances to agriculture grew 12% y-o-y to Rs 1.2 lakh crore.

Deposits grew 6% y-o-y and 5% q-o-q to Rs 9.23 lakh crore. Current account savings account (CASA) grew 13% y-o-y and 7% q-o-q to Rs 3.35 lakh crore. The capital adequacy ratio (CAR) remained at 12.56%, with CET1 ratio of 9.07% at the end of March 2021.

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Union Bank reports 83% QoQ jump in net profit

Banking & Finance

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Union Bank of India (UBI) reported an 83 per cent quarter-on-quarter (QoQ) jump in standalone net profit at ₹ 1,330 crore in the fourth quarter ended March 31, 2021 against ₹727 crore in the third quarter ended December 31, 2020.

A write-back in standard assets provisions and other income supported the bottomline.

The bank’s financial results for Q4FY21 are for the post-amalgamation (Andhra Bank and Corporation Bank merged with the Bank with effect from April 1, 2020) period and that for the year ago period (Q4FY20) are of the pre-amalgamation period. Hence, the results are not comparable year-on-year.

In the year ago period, the bank had reported a net loss of ₹2,503 crore.

The net interest income (difference between interest earned and interest expended) was down 18 per cent QoQ to ₹5,403 crore (₹6,589 crore in Q3FY21).

Other income, including income from non-fund based activities, jumped 51 per cent QoQ to ₹4,551 crore (₹3,016 crore).

A break up of other income shows that, recovery in written-off accounts at ₹1,931 crore was about 8.3 times the recovery made in the preceding quarter and core fee based income rose 15 per cent QoQ to ₹1,522 crore.

While loan loss provisions were higher at ₹4,712 crore (₹3,036 crore in Q3FY21), there was a write-back in standard assets provision of ₹1,443 crore (against a provision of ₹2,227 crore).

Gross NPAs increased to 13.74 per cent of gross advances as at March-end 2021 against 13.49 per cent as at December-end 2020.

Net NPAs rose to 4.62 per cent of net advances as at March-end 2021 against 3.27 per cent as at December-end 2020.

MD & CEO Rajkiran Rai G said the bank’s asset quality is under control and net NPAs are expected to decline below 3 per cent in FY22.

The bank has projected a 8-10 per cent growth in advances in the current financial year.

Rai said the target for recovery from stressed assets in FY22 is about ₹13,000 crore against actual recovery of ₹10,173 crore made in FY21.

Of the 22 stressed assets aggregating about ₹89,000 crore that banks have identified for transferring to the proposed National Asset Reconstruction Company Ltd (NARCL), Union Bank has zeroed-in on 17-18 assets aggregating about ₹4,000 crore for transfer, he added.

Total deposits increased by 4.69 per cent QoQ to stand at ₹9,23,805 crore as at March-end 2021.Total advances nudged up 1.39 per cent QoQ to ₹5,90,983 crore.

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Union Bank net dives 37% due to threefold jump in provisions

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Though its operating profit declined 9% YoY, it grew 12% QoQ to Rs 5,311 crore. Net interest income (NII) increased 5% YoY and QoQ to Rs 6,590 crore.

Union Bank of India’s net profit declined 37% year on year (YoY) during the December quarter (Q3FY21) as provisions jumped three-fold. Provisions increased 189% YoY and 25% quarter on quarter (QoQ) to Rs 5, 256 crore. Despite this, the bank reported a 40% rise in net profit sequentially. Though its operating profit declined 9% YoY, it grew 12% QoQ to Rs 5,311 crore. Net interest income (NII) increased 5% YoY and QoQ to Rs 6,590 crore.

The bank’s provision coverage ratio (PCR) improved 300 basis points (bps) sequentially to 86%. The net interest margin (NIM) increased 43 bps on a sequential basis to 2.94%, but came down 21 bps on a y-o-y basis.

Union Bank of India MD and CEO Rajkiran Rai G said the lender was expecting growth in both retail and corporate segments. “We are expecting more sanctions in the March quarter,” he added. The state-owned bank also specified that the net profit during Q3FY21 was subdued because in the comparable quarter last year the combined entity got a boost from Essar Steel recovery. Andhra Bank and Corporation Bank were amalgamated into Union Bank of India on April 1, 2020.

The lender’s asset quality also showed an improvement during the December quarter. Gross non-performing assets (NPAs) ratio improved 122 bps to 13.49%, compared to 14.71% in the previous quarter. Similarly, net NPAs ratio came down 86 bps to 3.27% from 4.13% in the September quarter. The lender has not classified any NPAs since August 31, 2020, due to the interim order of the Supreme Court. “The pro forma gross NPAs stood at 15.28% and net NPAs at 5.02%,” Rai said. The lender was expecting net NPAs between 4 and 5% in the next quarter (Q4FY21), he added.

Advances remained flat on a y-o-y as well as sequential basis at Rs 6.51 lakh crore. The lender is, however, expecting substantial credit growth in the next quarter. “We are expecting credit growth of 4-6% in the next quarter (Q4FY21),” Rai said.

Deposits grew 3% YoY to Rs 8.82 lakh crore, but remained flat sequentially. Current account savings account (CASA) ratio remained at 32.67%, compared to 34.67% in the September quarter. The capital adequacy ratio stood at 12.98% at the end of the December quarter, compared to minimum regulatory requirement of 10.875%.

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