After Rbi's rate cut, banks announce cut in deposit rates

After Saturdays announcement by RBI of cutting the repo and reverse repo by a 100 basis point, some private sector banks have announced cuts in the deposit rates offered by them.HDFC Bank, the second-largest private bank, has slashed interest rates on deposits.on some of its flagship products, with the reduction being steep for short maturities. The rates for deposits with a maturity of six months and 15 days have been reduced from 10.5% to 8.25%. For nine months and 15 days, the rates are from 10.5% to 9% while for one year and 15 days, they are now 10% from 10.5% earlier. The bank has also slashed the rates for two years and 15 days from 10.5% to 9.5%, making it the first private bank to cut deposit rates after some of the PSU banks cut rates a couple of weeks before. HDFC Bank has also slashed rates on its bulk deposits.

ICICI Bank is yet to take a final decision on rate cuts. Axis Bank is carrying out a review and may take a decision soon.IndusInd Bank’s will review its decision to cut deposit rates next week. For the past few weeks, it has been offering 11% for 200 days, 400 days and 1,000 days.Yes Bank on Saturday said that it has reduced its prime lending rate by 0.50 per cent with effect from December 8.The bank's PLR accordingly stands reduced to 16.5 per cent from the earlier 17 per cent.

The State Bank of India on Friday said it will consider rate cut after the Reserve Bank of India announces reduction in benchmark rates.SBI has already reduced benchmark lending rate by 75 basis points to 13 per cent, beginning last month. Most PSU banks have slashed deposit rates from December 1. They have done away with the special offer of 10.5% on deposits. The country’s largest bank, State Bank of India, offers 10% for 1,000 days. Corporation Bank has decided to offer a maximum rate of 9.5% for 1-3 years, Union Bank will offer a maximum rate of 10.05% for seven years and 9.5% for one-seven years.

SBI to fund Tatas' bid for Singapore co

India’s largest bank, State Bank of India (SBI), will offer Tata Power $1 billion to help it acquire Senoko Power, Singapore’s largest-power utility.In the past, SBI had extended a $1.2 billion loan for the Corus acquisition and about $500 million for financing the buy out of Jaguar and Land Rover( SBI, others to raise $3 bn for Tata Motors
). For the Senoko bid, SBI Capital Market has been appointed as the lead arranger for funds. SBI has agreed to provide a loan for 18-24 months. The loan is pegged 350 basis points over Libor.

Temasek Holdings had put Senoko Power on the block in early August, in a deal which is expected to raise close to $3 billion. Temasek is expected to shortlist bidders in the first week of September after which those shortlisted will be allowed to carry out a due-diligence exercise. The entire sale is expected to be concluded by the end of 2009.

SBI rejects rumours of JV with SG

State Bank of India (India) today rejectd rumours of its proposed joint venture with French financial services major Societe Generale. The bank said it has not received any official communication from the regulators.

SBI had entered into an agreement with Societe Generale Securities Services (SGSS), a division of Societe Generale Group in June this year to provide a range of security services like reporting, corporate actions, dividends collection and distribution, tax reclaim services amongst others.Following the signing of the pact, SBI is presently waiting for the Reserve Bank of India approval while Societe Generale's proposal is pending with the Foreign Investment promotion Board (FIPB).

State Bank of Bikaner & Jaipur to consider stock split

The board of State Bank of Bikaner and Jaipur, an associate bank of State Bank of India, will meet on May 22 to consider splitting the face value of the bank's shares from Rs 100 to Rs 10 per share.After clearance from the board, approval from the Executive Committee of Central Board of State Bank of India is also required.

Finmin awaits law ministry advice on SBI-SBS merger

The board of SBI and State Bank of Saurashtra had already given their nod for the proposed merger in August last year despite opposition from a section of bank employees.The proposed merger would be the first of its kind among public sector banks.The finance ministry has sought the law ministry’s advice on the merger which is yet to come. Once the advice comes, the proposal would go to the Cabinet for approval

Speaking on the merger, SBI chairman OP Bhat had earlier said “other formalities regarding the merger have been completed and only the government approval remains.” Since State Bank of Saurashtra was a 100% subsidiary of SBI, the merger was only a technical process, he had said.

SBI also convened a meeting to consider merger proposal with other associate banks in January but was postponed later following opposition from the unions.

SBI, Macquarie line up $1-bn fund for core play

After foreign institutions and private sector banks, it is now the turn of public sector banks to set up infrastructure funds. State Bank of India, the country’s largest bank, along with Macquarie Capital Group, on Wednesday announced its intention to raise a new $2-billion infrastructure fund.

SBI and Macquarie Capital will hold 45% each in the proposed fund management company, while the International Finance Corporation (IFC) will hold the remaining 10%. Macquarie, SBI and IFC together plan to contribute a total of $450 million in anchor investments to start the fund, which will raise further capital from both domestic and international institutional investors. The fund is scheduled to be launched by the end of the second quarter of 2008.

The fund intends to provide equity and equity-like capital for investments in traditional infrastructure such as roads, ports, airports and power.This is the first private equity fund launched by SBI, and it plans to have different tie-up for other sectors.SBI chairman OP Bhatt will be the chairman of the company, while CEO and MD will be appointed by Macquarie Capital.

Unlike other funds, this new fund is unlikely to go in for a minority stake of 5%. With the backing of Macquarie, which is known for its infrastructure powers, the fund would look for larger equity play and also an influence over the assets.It will also look at investment opportunities in infrastructure-related assets and businesses.

Read more in The Economic Times article.

SBI’s rights issue fully subscribed

A $4.1 billion rights issue by State Bank of India, India’s largest bank, was fully covered on Tuesday, despite the global financial turmoil that knocked its shares down by nearly a third during the offer period.

The state-run bank offered investors one share at Rs1,590 for every five held, looking to raise Rs16,736 crore to meet demand for loans in a growing economy. It was the bank’s first share sale in more than a decade.

The Bank of New York with a 7.42% stake through SBI’s global depository receipts and state-run Life Insurance Corp. of India with a 3.6% stake are the largest shareholders in the bank after the government.The government said last month it would invest Rs9,996 crore to maintain its 59.73% stake in the bank.

Citigroup, CLSA India, Deutsche Bank, DSP Merrill Lynch, Kotak Investment Bank and SBI Capital Markets are the lead managers to the issue.

Read more in The Livemint article.

SBI, others to raise $3 bn for Tata Motors

State Bank of India (SBI) led consortium will raise $3-billion loan by April for Tata Motors’ acquisitions abroad, including the $2-billion Jaguar and Land Rover deal.Apart from SBI, the consortium will include leading entities like Citibank, Standard Chartered, BNP Paribas, JP Morgan, Tokyo Mitsubishi UFJ and Mizuho Financial Group, a source said. The country’s largest lender is also in talks with two-three public sector banks to be a part of the consortium, the source said.

Though the exact amount financed by each member could not be ascertained, it is understood to be equally contributed by all banks, around $37.5 million, by each entity in the consortium.Financiers in the consortium will normally receive commissions in the range of 0.50-1% of the deal amount, but it may vary according to the period of funding and the amount to be raised.

Read more in

The Economic Times article.

Govt considering proposal to merge SBI, SBS

Government is considering a proposal for merger of State Bank of India and State Bank of Saurashtra as the boards and unions of the two have approved the move.This was stated by Minister of State for Finance Pawan Kumar Bansal in Rajya Sabha today.The boards of directors of SBI and State Bank of Saurashtra have approved merger to "allow economies of scale in terms of network, manpower and other resources besides entailing better management of risks," he said.

He said the Government would not put pressure on banks to merge although the Narasimham committee on banking sector had recommended consolidation in the banking sector so that Indian banks are equipped to compete at the global level.

Read more in


The Economic Times article.

SBI Cap to set up Rs 400cr VC fund

State Bank of India's subsidiary SBI Capital Markets plans to set up a $100 million (about Rs 400 crore) venture capital (VC) fund to invest in knowledge-based sectors in the country.The SBI Capital Markets has already entered into a 50:50 joint venture Softbank Investment Holdings of Japan for the fund.

The India Knowledge Fund will target specific India sectors including IT, knowledge process outsourcing, clinical research outsourcing, nanotechnology, online and mobile businesses, environmental technology and alternative energy, SBI said in its letter of offer filed with SEBI for its forthcoming Rs 16,736 crore rights issue.

The fund will invest primarily in unlisted, high growth companies through initial investments ranging from $3 million to $10 million.India Knowledge Fund will be co-managed by both SBI Capital Markets and Softbank Investment Holdings.Softbank Investment manages over 18 venture capital funds, making it one of the largest, most active venture capitalists in Asia.

Read more in The Business Standard article.

SBI rights at a 35% discount

State Bank of India, the public sector banking giant, has priced its rights issue at a 35% discount to its closing price on Friday.The bank, 59.73% government-owned, will raise Rs 16,736 crore by offering one share for every five held at Rs 1,590 apiece, a discount to its Rs 2,437.25 stock price on January 11. The cut-off date for the issue is February 4.

The discount should act as an extra incentive for investors of the bank which has seen its stock price soar 101% in the last one year — from Rs 1,222 to Rs 2,462 currently. The stock closed at Rs 2,462.25 on Monday.

Sources said the bank plans to sell over 10 crore shares, of which 86 lakh will be reserved for employees holding shares of the bank, the first such instance among public sector banks.

Officials said the price of the issue was arrived at using the one-year average, which came to Rs 1,533 per share.

The bank’s capital will grow to Rs 650 crore from the existing Rs 526.30 crore.Analysts said a lower discount could possibly allow the bank to raise more money, but the discount will ensure that the issue will “cruise through”.

Read more in The DNA Money article.

SBI, ICICI buy 3% in Jaiprakash Power Ventures

State Bank of India (SBI) and ICICI Bank have together acquired 3% in Jaiprakash Power Ventures (JPVL), a wholly-owned subsidiary of Jaiprakash Associates (JAL), for Rs 400 crore in first of two private placements before its initial public offer (IPO).

This would be followed by another pre-IPO placement before the firm hits the market with a public offer, together raising Rs 3,500 crore.The company will dilute another 17% through the private placement and IPO.Of this, the pre-IPO deal is expected to be for about 3-4% of the equity, while the rest would be through the public offer. SBI and ICICI are supposed to have paid a little over Rs 230 per share.

JPVL is looking at a valuation of $5.5 billion, post-IPO. Following the IPO, the shareholding of Jaypee group in JPVL would come down to 80%.

Read more in The Economic Times article

SBI to absorb 6 associates by Mar ’09

SBI chairman O P Bhatt, who had convened the meeting of six associate banks of SBI at its Nariman Point office, made it clear that he wanted nothing less than a “bullet” merger — all the six associates, three of which are listed entities, should be fused into the mothership in one shot, before March 31, 2009.

He was insistent because separate integration exercises — as was done in the case of State Bank of Saurashtra, which ceases to be an entity on January 26, 2008, — would be extremely cumbersome, gargantuan and mind-numbing considering the complexity of manoeuvres needed to keep the 3.3 lakh combined employees happy.

The boards of the SBI and the six associates will now hold a meeting on January 25 to give their in-principle nod to the merger.The finance ministry and the Reserve Bank of India are expected to give their green signals.The goal is to have a common balance-sheet as on March 31, 2009, said an SBI official in the know.

That’s important because India will open its doors fully to foreign banks by then. The size of operations of the foreign banks could dwarf the domestic players, which is why the government has been at pains to encourage consolidation.

Read more in The DNA Money article.

PE funds invest Rs 600cr in Godrej Inds

Godrej Industries has alloted 27.9 million shares for Rs 215 each to various entities raising about Rs 600 crore, a company statement said.

Of the shares alloted 13.95 million shares to State Bank of India (Equity), 5.3 million shares to Quantum, 3.14 million shares to Sloane Robinson and 2.3 million were issued to Deutsche Securities Mauritius.

UTI likely to sell 15% in AMC to global player

UTI Mutual Fund, owned equally by Life Insurance Corporation and three public sector banks, is likely to rope in a strategic partner by offering 15 per cent equity in the Asset Management Company, ahead of its Rs 2,000 crore ($ 500 million) initial public offering (IPO).The strategic partner is likely to be an international player, having a presence in developed markets, said sources.

The strategic partner would be offered a slot on the UTI AMC board with a view to bringing in technology expertise and international knowhow, among other things.

The existing shareholders — LIC, State Bank of India, Punjab National Bank and Bank of Baroda (they are financial investors) — would be diluting a combined 20 per cent stake in the Mumbai-headquartered fund house during the IPO. Post-listing, UTI MF will become the first mutual fund house in India to be traded on the stock exchanges.

Shareholding by the four state-owned entities, which bought the entire government holding in 2005 by acquiring 25 per cent stakes each in UTI AMC, would come down to a combined 65 per cent after the strategic stake sale and IPO. They had bought the government’s stake in the fund house in 2005 for Rs 1,236 crore — a blockbuster investment considering that the AMC is currently valued between Rs 6,000 and 8,000 crore within less than three years.

UTI AMC has close to 8.5 million customers and it is the third biggest fund house (after Reliance and ICICI-Prudential MFs) with assets under management of over Rs 45,000 crore.

Read more in The Business Standard article.

Yes Bank raises Rs 1.82 bn in debt

Private sector lender Yes Bank said over the weekend it raised Rs 1.82 billion through private placement of bonds to augment its capital adequacy. The bank said in a statement it had placed unsecured, redeemable, non-convertible, subordinated bonds worth Rs 500 million with an option to retain the oversubscription.

The fund raising is part of a plan to raise Rs 8.4 billion in equity and debt. Yes Bank said it would privately place or sell 20 million shares to qualified institutional buyers to raise up to Rs 5 billion.The rest would be raised in Tier I and Tier II debt, it said.

Indian banks, including the largest lender State Bank of India, are raising debt and equity to sustain high loan growth and meet the central bank's capital adequacy norms.State-run State Bank of India plans to sell shares worth Rs 100 billion around the end of 2007 and Bank of India also plans to sell some stake.

UTI AMC to sell 49 pc stake through IPO

Leading mutual fund player UTI AMC on Wednesday said its board has approved a proposal to sell 49 per cent stake through an Initial Public Offer by the end of this fiscal.This will be the first-ever public offer by a mutual fund house in the country.

The four sponsor companies, State Bank of India, Punjab National Bank, LIC and Bank of Baroda, own 25 per cent stake each in UTI AMC. Post-IPO, their combined holding will come down to 51 per cent.The decision to go for an IPO was taken by the company's board at its meeting yesterday. The government had earlier cleared the IPO proposal.

The mutual fund house was formed after splitting the then UTI following a fiasco in its flagship scheme, US-64, in 2001.he proceeds of the issue will be used to fuel the company's increasing business needs.

RBI may block Citi`s plan to buy 3% in NSE

The Reserve Bank of India (RBI) may block Citibank India’s proposal to pick up 3 per cent stake in the National Stock Exchange (NSE).Citigroup already holds 2 per cent in the exchange.

A source close to development said the bank proposed to buy shares from the State Bank of India group, which holds 12 per cent (9 per cent by the State Bank of India and 3 per cent by subsidiary, SBI Caps).The bank has submitted a proposal to the RBI.

The banking regulator is of the view that Citibank India is a member of the Citigroup, which already owns 2 per cent stake in the NSE. Therefore, granting permission to Citibank India may lead to conflict of interest among related entities holding stake in the same entity.

As per the demutualisation norms, an individual entity cannot hold more than 5 per cent stake in an exchange. SBI and SBI Capital Markets have already pared their stake by 3 per cent and 2 per cent, respectively ,thus bringing down the combined stake to 12 per cent from 17 per cent earlier.

NSE has institutional holding from SBI, Industrial Development Bank of India, Corporation Bank, Oriental Bank of Commerce, Union Bank, Bank of Baroda and Canara Bank.Thus, NSE has already offloaded 26 per cent stake in favour of foreign investors as permissible under the foreign direct investment norms for stock exchanges.

SBI plans to raise Rs 10,000 cr by December

The country's largest lender, State Bank of India (SBI), plans to raise Rs 10,000 crore by December, a top bank official has said."We plan to raise Rs 10,000 crore by December and we are evaluating various options of fund-raising," SBI Chairman O P Bhatt told reporters on the sidelines of a banking conference here on Wednesday.

The process of consolidation within the SBI group had been kicked off recently with the decision to merge State Bank of Saurashtra with the group.However, no timeframe has been set for consolidation with the other associate banks of SBI.

Bhatt said there had been a fall in credit demand but this month has seen a pick-up.
On NPAs, he said the issue was not a concern for the industry at the moment. However, with the economy growing at nine per cent in the last two years and with bank credit growing at 30 per cent in the last four years, substantial assets had been built up.

Read more in The Economic Times article.

Fin Tech buys 1% NSE stake for Rs 125cr

Software firm Financial Technologies India has acquired 4,50,000 shares (1%) stake in National Stock Exchange from ICICI Bank for Rs 125 crore.According to a release issued by Financial Technologies to the BSE today, the company joins other NSE shareholders including the New York Stock Exchange (NSE), Goldman Sachs, ICICI, SBI, IDBI, LIC and various public sector banks.

NYSE and three financial investors — General Atlantic, Goldman Sachs and Softbank Asian Infrastructure Fund — had picked up 5% stake each in NSE for $490 million (Rs 2,205 crore) in January this year.That had pegged the upper-end valuation of the country’s largest bourse at $2.5 billion (Rs 11,250 crore). NSE had recorded a net profit of Rs 191 crore on a revenue of Rs 472 crore for the financial year ended March 31, 2006.
With the current FT-ICICI Bank deal, the valuation of NSE has moved up to Rs 12,500 crore - an increase of around 11% in seven months.