UCO Bank to issue 3.13 cr equity shares to LIC on preferential basis

Kolkata-based UCO Bank on Tuesday proposed an issue of 3.13 crore equity shares to Life Insurance Corporation of India on preferential basis. The decision was taken by the board of directors at a meeting in Kolkata this afternoon.

“The issue of 3.13-crore equity shares to LIC on preferential basis will be done at a price as determined in accordance with Securities Exchange Board of India (ICDR) Regulations 2009. It will be subject to approval of the Union Government, Reserve Bank of India and the bank's shareholders,” the bank said in a notification to the BSE on Tuesday.

LIC holds 8.44 per cent of the total number of shares of UCO Bank. It held a total of 5.3 crore shares in the bank as on December 31, 2011, as per data available on the shareholding pattern of the bank from the BSE.

Meanwhile, Allahabad Bank also plans to consider issue of equity shares on preferential basis to LIC at its board meeting on Wednesday.

Life Insurance Corporation holds 8.65 per cent of the total number of stocks of Allahabad Bank as on December 31, 2011.

New Corporation Bank ED

Mr Amar Lal Daultani, General Manager of Allahabad Bank, has assumed charge as Executive Director of Corporation Bank with effect from February 3.

The bank informed the BSE on Saturday that the Central Government, after consultation with the Reserve Bank of India, has appointed Mr Amar Lal Daultani, General Manager, Allahabad Bank, as Executive Director of the Corporation Bank with effect from the date of his taking over charge of the post till March 31, 2015 (the date of his superannuation), or until further orders, whichever is earlier.

Accordingly, Mr Daultani has assumed office as the Executive Director of the bank on February 3, it informed BSE.

Fee-based income, core biz lift Allahabad Bank net 35% in Q3

Allahabad Bank is hopeful of receiving Rs 1,000 crore capital infusion from the Central Government under the recapitalisation scheme by the end of this fiscal. The fund infusion would be done primarily through the equity route, said Mr D. Sarkar, Executive Director, Allahabad Bank.

The bank's capital-adequacy ratio stood at 12.75 per cent as on December 31, 2011.

“We had asked for Rs 1,000 crore from the Government and we are hopeful of getting the funds within the next one week. The infusion will be through direct equity,” Mr Sarkar said. The bank's Tier I capital was at 8.91 per cent as on December 2011.

The bank also has headroom to raise Rs 4,700 crore; however, it may not go for further capital infusion this fiscal.

Meanwhile, riding on the back of higher fee-based income and growth in core operations, bank posted 35 per cent growth in net profit at Rs 560 crore for the quarter ended December 31, 2011, compared with the same period last year.

‘Other income' rose 35 per cent to Rs 348 crore. Shares of Allahabad Bank dipped by 0.76 per cent to close at Rs 155.80 on the BSE on Monday.

“Moving forward, our thrust will be on growing our business, bottom-line and garnering fee-based income.

“With these strategies we hope to sustain our profitability,” said Mr J. P. Dua, the bank's Chairman and Managing Director.

The net interest margin improved to 3.73 per cent (3.44 per cent). The bank is hopeful of maintaining NIM at over 3.5 per cent by the end of this fiscal.

Interest rate cut?

Replying to a query on the possibility of an interest rate cut, Mr Dua said, “I do not think that the time for that (cut in interest rate) has come yet.”

The percentage of net non-performing assets to advances increased to 0.79 per cent (0.59 per cent). Provisions increased by 26 per cent to Rs 470 crore.

shobha@thehindu.co.in

Allahabad Bank, Indian Overseas Bank & Sompo Japan Insurance to infuse Rs 200 cr in Universal Sompo

KOLKATA: Allahabad Bank, Indian Overseas Bank and Sompo Japan Insurance will invest Rs 200 crore in their joint venture Universal Sompo General Insurance Co for the first time in four years to sustain business after underwriting losses eroded more than 100 crore of the insurer's capital. Underwriting loss means the insurer settled more in claims than its premium collection by selling risk policies.

"We need fresh capital to maintain our solvency margin as well as to expand business," Universal Sompo's executive chairman ON Singh told ET over telephone.

The firm plans to grow business by nearly 50% next fiscal and aims to collect 600 crore as premium. It expects to close the current fiscal with a 425-crore collection. "Our shareholders have agreed to inject 200 crore together as the need for risk capital has increased. They are expected to take this proposal to their respective boards soon," Singh said. Karnataka Bank and Dabur are also shareholders in the insurer.

The capital infusion is expected to be done by March. The partners will invest according to the size of their holdings and none will pay a premium. Initially, overseas partner Sompo, a multinational insurance firm, joined the venture by paying a share premium for its 26% stake. A senior Allahabad Bank executive confirmed the bank had received a proposal for fresh investment. The bank is the single-largest stakeholder with 30% equity in the JV, while Indian Overseas Bank has a 19% stake. Karnataka Bank holds 15% while the non-bank partner Dabur Investments has a 10% interest.

"It's an investment for us. We will discuss this proposal at the board but we are waiting for the insurance regulator to announce the new capital raising guidelines for general insurers," the Allahabad Bank executive said.

Universal Sompo received its licence in November 2007 and started journey with a Rs 235-crore net worth, which has now shrunk to Rs 125 crore because of underwriting losses of close to Rs 110 crore.

According to data released by Insurance Regulatory & Development Authority, general insurance companies collectively saw a 68% jump in underwriting losses in 2010-11 at Rs 9,969 crore, compared with Rs 5,944 crore in the preceding fiscal.

The insurer sells risk products for health and critical illness, personal accident and disability, home and motor, besides group products like employee benefit and project insurance.

Source: EconomicTimes

Allahabad Bank may recast Rs 200/300-cr loans to steel, textile sectors

Close to Rs 200-300 crore of loans extended by Allahabad Bank to the steel and textile sectors might be restructured during the third quarter of this fiscal. The bank had restructured loans of about Rs 125 crore during the second quarter of this fiscal, Mr D. Sarkar, Executive Director, Allahabad Bank said.

The total outstanding loans under restructured accounts were at Rs 2,941 crore as on September 30, 2011, up from Rs 2,815 crore as on March 31, 2011.

A total of Rs 2,722 crore of the restructured loans were in the standard category while close to Rs 220 crore was in the category of non-performing assets (NPA) as on September 2011.

“Some companies are finding it difficult to bear the burden of high interest rate as they are unable to pass on the costs to their end-customers. So we have to do some restructuring of accounts in sectors such as steel and textiles,” Mr Sarkar told Business Line.

Gross NPA

Allahabad Bank expects its gross NPAs to inch up slightly during the third quarter. The percentage of gross NPA to total advances was at 1.77 per cent as on September 2011, marginally up from 1.74 per cent as on March 2011.

“We moved to system driven identification of NPAs in September. So there will be some system stabilisation issues in the short term. The restructuring exercise might also lead to some sacrifice by the bank.

“Though it is difficult to get an exact estimate of NPAs until we get the final auditors report, however, both these factors might push up the gross NPAs a bit,” Mr Sarkar said.

NIM stable

Meanwhile, Allahabad Bank expects its net interest margin to remain stable or even marginally improve to 3.7 per cent by the end of this fiscal.

The net interest margin improved to 3.68 per cent during the quarter ended September 30, 2011, up from 3.34 per cent during the corresponding period last year.

“We will maintain our NIMs by focusing on operational efficiency,” he said.

shobha@thehindu.co.in

Allahabad Bank revamps AllBank Finance

AllBank Finance — the 100 per cent subsidiary of Allahabad Bank that has been barely functional since 2005 — is now on a revamp spree. Hit by falling revenues and profits, that almost halved last fiscal, the company's board has been reconstituted and AllBank Finance plans to focus on new segments to drive its revenues.

The board — reconstituted by Allahabad Bank two months ago — will have four members from the bank, said Mr J. P. Dua, Chairman and Managing Director of the bank. “Mr Dua will be the chairman of the Board, while Mr D. Sarkar, executive director, and Mr A. B. Bhattacharjee and Mr Narang, both general managers, will be the directors on the board,” Mr Dua said.

This apart, the board will have three independent directors — Mr Vinod Kothari, a chartered accountant and company secretary; Mr Subir Das and Mr Emron Samuel, both chartered accountants. Allahabad Bank has also selected Mr M. Satpathy as the vice-president and Chief Executive Officer of the company.

Under the new management, the company plans to venture into such new areas as trustee and custodial services and carry out techno-economic viability study of projects to improve earnings; besides raising debts, doing syndication of loans and distributing mutual funds.

Incorporated in 1951 as “Allahabad Bank Nominees Limited”, the company subsequently changed its name to “AllBank Finance Limited” in 1991.It has, however, remained dormant since 2005, Mr Dua said.

Hardening interest rates, tight liquidity and rising inflation pulled down AllBank Finance's revenues and profits, the company said in its annual report 2010-11. The company reported a 46 per cent drop in revenue, at Rs 5.80 crore, and 61 per cent decline in net profit to Rs 2.80 crore for the year ended March 31, 2011.

“Despite having adequate capital, the company has not been doing well due to the lack of focus. Our main aim now is to revive the focus,” Mr Dua said. The company — which has two branches, one each in Kolkata and Mumbai — plans to open one in Delhi by end January and another one, either in Bangalore or Chennai, by March.

Govt to interview 10 EDs for banks CMD post on January 4

MUMBAI: The appointments committee will interview executive directors of ten public sector banks on January 4, 2012 for CMD post in six banks.

The ten candidates called for the interview include S.S. Mundra from Union Bank of India, R V Iyer and Rajiv Dubey from Central Bank of India, Ashwini Kumar of Corporation Bank, Archana Bhargava from Canara Bank, V Kannan from Oriental bank of Commerce, Ravi Chatterjee from Syndicate Bank, Rajeev Rishi from Indian Bank, Ashwani Kumar from Corporation Bank and Rakesh Sethi from Punjab National Bank.

The candidates are being selected to fill vacancies in fiscal year 2012-13 in Bank of Baroda, Bank of India, Canara Bank, Dena Bank, Allahabad Bank and United bank of India.

Meanwhile, the government has yet to issue notification for the post of executive director in bank like Indian Overseas Bank and Andhra Bank, Even as the candidates names have been cleared.

Source: EconomicTimes

Punjab National Bank raises NRE deposit rates to 9.25 per cent

MUMBAI: The second largest public sector lender Punjab National Bank today increased the interest rates on NRE term deposits ranging one to five year period to 9.25 percent. The rates will be effective from January 1, the bank said in a filing to the BSE.

Last week, many other banks HDFC Bank, Yes Bank, Federal Bank, Allahabad Bank and Dhanlaxmi Bank among others had steeply increased the interest rates on select maturities of NRE deposits.

HDFC Bank increased the interest rates on NRE deposits of Rs one crore and above with a maturity of one to two year to nine percent against 3.82 percent earlier. It has, however, left the NRO deposit rates unchanged.

The state-run Allahabad Bank has also raised its NRE deposits up to 7.5 percent. The Kolkata-based bank will now offer 7.5 percent for one to two years tenor (against 3.82 percent earlier), 7 percent on deposits of two to three years (from 3.51 percent), and 6.75 percent for those above three years (from 3.64 percent).

Also, the Kochi-based Federal Bank and Laxmivilas Bank have also increased its interest rates on NRE deposits for various slabs in order to attract non-resident deposits. Another private sector lender IndusInd Bank also increased pricing 9.25 percent among the state-run banks Dena Bank offers the highest pricing at 9.6 percent. Similarly, Yes Bank came out with a 15 month-and-15 days to 16-month NRE deposit offer, promising depositors 9.60 percent interest.

Source: EconomicTimes

Allahabad bank to expand branches

COIMBATORE: Public Sector Allahabad Bank has set a target of adding 155 branches and 500 ATMs across the country this fiscal, besides a branch in Bangladesh, a top bank official said today.

Of this, three branches would be opened at Namakakal, Tirunelveli and Thanjavur in Tamil Nadu, which has 51 branches at present, Bank's Executive Director,M R Nayak told reporters after opening its 2,459th branch at Kalapatti in the city.

Having a branch in Hongkong and a representative office in China, the Bank is awaiting clearance for starting a branch in Bangladesh, he said, adding, there were also plans to strengthen Bank's presence in Chennai, Hyderabad, Punjab and Bangalore, to tap business potential by opening more branches.

Stating that the focus of business in Tamil Nadu would be on SME/ MSME, retail loans and agricultural loans, Nayak said the bank has a predominant presence in textile clusters, with over rs.250 crore business volume in Tirupur branch.

Source: EconomicTimes

SBI, DDA, PNB babus fined for corruption

New Delhi: Over 200 government officials have been penalised for their alleged involvement in corruption by the Central Vigilance Commission (CVC) during September this year.

Out of the total of 201 government employees, the highest number of 46 were from Central Board of Excise and Customs, 29 from Syndicate Bank, 20 from State Bank of India (SBI) and 13 each from Delhi Development Authority and Ministry of Railways among others, a CVC report said.

Besides them, 11 officials each from Bharat Sanchar Nigam Limited, Allahabad Bank and Punjab National Bank, five each from United India Insurance Company Limited and Ministry of Urban Development have also been penalised.

According to the Commission's monthly performance report for September, a total of 1,797 complaints were received against various government officials for their alleged involvement in corrupt practices.

The Chief Technical Examination wing of the CVC also effected a recovery of about Rs 3.36 crore from various departments after inspecting procurement-related works, it said.

A recovery of a total of about Rs 73 crore has been made by the Commission between January and September this year after inspection of different department-related works.

"The Commission is deeply concerned over continuing delay in filling up the post of Chief Vigilance Officer (CVO)in Delhi Transport Corporation," the report said.

Source: Financial Express

Allahabad Bank freezes lending loans to power sector on increasing financial stress

MUMBAI: Financial stress to banks caused by the power industry increased with Bank of India set to restructure a quarter of its power loans and Allahabad Bank freezing lending to the sector whipsawed by losses at state distributors and hurdles to new plants.

Loans to Tamil Nadu Electricity Board and Rajasthan Electricity Board will be restructured - the tenor of the loans and interest payable will be changed - to avoid an imminent default and firewall banks from rising bad loans, senior bank officials said.

"We have received requests from one or two state electricity boards and we are looking into it," said Bank of India Executive Director BA Prabhakar. BoI has lent Rs 8,000 crore to various state boards. "We have yet not restructured. No one has defaulted yet."

The country's financial system is under stress because of mounting losses at state distribution companies and thwarted project clearances. Some projects, such as East Coast Energy - in which Goldman Sachs and General Atlantic are stakeholders, are stuck half way because of local protests.

Subsidised tariffs have pushed power distribution companies to the brink of collapse with losses soaring last fiscal by 45% to an estimated Rs 40,000 crore.

Allahabad Bank, which has lent more than Rs 13,600 crore to utilities and distributors, has stopped lending to the sector.

"In the past six months, we have not sanctioned a single fresh loan. Till things are clearer ... we don't want to go into this area," Allahabad Bank CMD JP Dua said.

Dena Bank and Indian Overseas Bank are also considering to restructure loans to the power sector. Punjab National Bank restructured Rs 2,500 crore of loans to power companies last quarter.

Source: EconomicTimes

Banks can't have more than 10 general managers for business up to Rs 1.5 lakh crore

KOLKATA: In a move that is going to freeze promotions in public sector banks at senior levels for at least the next one year, the government has proposed to limit the number of senior executives in these banks, according to the size of their business, two bank executives familiar with the development said.

The finance ministry has said that banks should not have more than 10 general managers for business up to Rs 1.50 lakh crore, against the previous rule of 20 GMs for Rs 1 lakh crore.

It has also suggested a 1:3:9 ratio of GM, DGM and AGM in government banks. "This is the first time that the ministry has stepped into such micro manpower management of public sector banks," a bank chairman told ET, requesting anonymity.

This will create a battery of surplus manpower in senior categories and top bankers said that they may have to put a halt in promotions at senior levels. For example, Allahabad Bank will have four surplus GMs, while Punjab National Bank and UCO Bank will have eight and nine excess GMs, respectively. State Bank of India will not have to follow the proposed norm as it is guided by a separate act.

However, existing officials will be allowed to continue till retirement. According to the ministry's proposed rules, Punjab National Bank can have a maximum of 37 GMs till March 2012, while Bank of Baroda and Bank of India can have 35 and 34, respectively.

These banks will be allowed to add one GM each for every Rs 15,000 crore of incremental business. The ministry shot off a letter to all public sector bank chairmen on Wednesday and said that there is "mismatch in the number of posts in senior positions and an immediate feeder channel has taken place which is creating difficulty in proper manpower management." The ministry has directed banks to submit their views on the proposed changes in a week's time.

PSBs have been facing a severe mid-level crisis for the past threefour years, following mass retirement and the move is seen as an effort to rationalise the human resources available in these banks. "A change in regulation for PSB manpower management was long required. The guidelines were last revised in 2007 and the business environment has dramatically changed since then," a general manager in a Kolkatabased bank said.

Source: EconomicTimes

Allahabad Bank Q2 net up 21% on interest income

Riding on the back of a rise in net interest income and higher margins, Allahabad Bank posted 21 per cent growth in net profit at Rs 488 crore for the quarter ended September 30, 2011, against Rs 403 crore during the corresponding period last year.

On a sequential basis, profits rose 17 per cent from Rs 418 crore during quarter ended June 30, 2011.

The net interest margin during the quarter under review, improved to 3.68 per cent (3.34 per cent) on account of operational efficiency, said its Chairman and Managing Director, Mr J.P. Dua.

Slippages rose by 15 per cent at Rs 520 crore (Rs 453 crore). “The slippages were up primarily on account of some small ticket loans in the micro, small enterprises and agricultural sectors,” Mr Dua said. However, there was no concern regarding asset quality so far and the bank was able to recover Rs 443 crore during the first half of the current fiscal, Mr Dua added.

The percentage of the bank's gross non-performing assets (NPA) to advances was flat at 1.77 per cent, while the percentage of its net NPAs to advances inched up marginally at 0.69 per cent (0.56 per cent).

Allahabad Bank scrip inched up by 8.05 per cent to close at Rs 161.05 on the BSE on Wednesday.

The bank does not have any immediate plan of hiking interest rates on savings bank account, Mr Dua said. “There is adequate liquidity in the system. We will, however, watch the market before taking a call on the issue. We might look at adding some innovative products in the savings bank basket.”

The capital adequacy ratio of the bank was at 12.99 per cent as on September 30, 2011. The bank has approached the Union Government for capital infusion to the tune of Rs 1,000 crore during the current fiscal. Allahabad Bank had received capital support to the extent of Rs 670 crore from the government last year.

Credit cards: Allahabad Bank, Amex tie-up

Kolkata, Oct. 19:With a view to enlarge its product bouquet, Allahabad Bank has tied up with American Express Banking Corporation to offer credit cards to its customers. 

The tie-up would enable the bank to provide value-added services through credit cards to its high-net-worth customers, said a press statement issued by the bank.

Allahabad Bank ties up with Aditya Birla Money

KOLKATA: State-run Allahabad Bank has entered into a strategic alliance with Aditya Birla Money, the broking, wealth management and retail distribution arm of Aditya Birla Financial Services Group.

This will provide 27 million Allahabad Bank customers the convenience of investing in financial products online.

With online trading gaining significant momentum, this strategic tie-up will enable Aditya Birla Money to tap the bank's customer base and provide them with online trading facilities.

Through this tie-up the Kolkata-based bank will be able to extend its offerings beyond the realm of traditional banking, creating significant value for their customers and providing them a superior trading experience with seamless integration of state-of-the-art technology.

The bank's account holders can benefit from Aditya Birla Money's single window interface to invest in equities, derivatives, commodities and IPOs.

"Under the backdrop of growing financial services opportunity and the increasing surge in internet penetration levels, this tie up serves as a win-win proposition for both partners," the bank said in a statement issued on Monday.

Source: EconomicTimes

OBC, Allahabad Bank raise fixed deposit rates

Two public sector lenders Oriental Bank of Commerce (OBC) and Allahabad Bank today raised fixed deposits rates by up to 30 basis points (bps) on select maturities.

The move come two day ahead of the mid-quarterly review of the monetary policy.

Term deposit rate for maturities between 1-2 years has been raised from 9.60% to 9.75%, OBC said.

At the same time, another public sector lender Allahabad Bank increased interest rate on term deposits of between 91 and 179 days by 30 basis points to 7.30%.

Interest rates on other maturities would remain unchanged.

The Reserve Bank of India (RBI) is scheduled to announce mid-quarterly review of monetary policy on September 16. It is expected that the central bank will raise key policy rate further to tame inflation.

Banks are of the view that if RBI raises rates, they will pass on to customers.

In July, the RBI raised the short-term lending (repo) rate by 50 basis points to 8% and the short-term borrowing (reverse repo) rate by a same margin to 7% in a bid to tame inflation.

Subsequently, the interest rate under the Marginal Standing Facility, an additional borrowing window, has gone up to 9% from the earlier level of 8.5%.

Source: Business Standard

Allahabad Bank raises interest rate on term deposits

MUMBAI: State-run Allahabad Bank today hiked interest rates on deposits for less than Rs 5 crore with term ranging from one year to less than two years by 50 basis points to 9.5 per cent.

The increased rates will come into effect from September 5.

"...the Bank has decided to revise the interest rate upward by 0.50 per cent per annum on domestic term deposits scheme for the period from one year to less than two years of below Rs 5 crore...," the bank said in a filing to the Bombay Stock Exchange (BSE).

The bank's shares closed at Rs 175.80, down 1.62 per cent from its previous close on the BSE.

Source: Economic Times

Allahaband Bank eyeing to open branches in Asian cities

MUMBAI: To increase its international footprint, state-run Allahabad Bank is mulling over opening overseas branches in four Asian cities, a top official said.

"We have approached RBI for four new branches. One in Singapore, another in Dhaka, then Shanghai and Kowloon in Hong Kong," chairman and managing director of the bank J P Dua told PTI here.

However, the Reserve Bank of India (RBI) is yet to give a go-ahead on the proposal, Dua added.

Presently, the Kolkata-headquartered bank has its sole overseas branch operational in Hong Kong and also has a representative office in mainland China's Shenzen.

Dua also said that the bank is planning to augment its capital base in the last quarter of the current fiscal, but is yet to decide about the component to be raised and the route to adopt.

The bank is targeting a higher-than-industry credit growth of "24-25 per cent" for the fiscal, which demands capital augmentation, Dua said.

"We will see in the last quarter, right now we are comfortable. But as the growth takes place, capital is always needed," he said.

Dua said, apart from taking the normal routes for tier-I and tier-II augmentation, the bank may again go for a capital infusion from the Government which increases the promoter shareholding.

"May be tier-I, may be tier-II also and there is a third possibility (of) the government may also induct some funds like last year (when) they gave us Rs 670 crore," he said.

Presently, the total capital adequacy of the bank stands at 12.75 per cent, of which, the tier-I component stands at 8.4 per cent, he said.

Source: EconomicTimes