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.

Central Bank may recast loans to power utilities

Public sector lender Central Bank of India may go in for restructuring of some of its loans given to power companies in the current quarter.

"We have a total exposure of around Rs 12,000 crore to the power distribution companies (discoms) and some of them are likely to be restructured in the current quarter (January-March)," a top bank official told PTI. Of late, banks have been concerned about their advances to the SEBs (state electricity boards) of Tamil Nadu, Bihar, Rajasthan, UP, Haryana, MP and Punjab, which according to the rating agency Crisil, are the most vulnerable ones.

A recent Crisil report had said that losses of discoms rose 24 per cent to Rs 27,500 crore between 2006-07 and 2009-10 and may rise to Rs 35,000-40,000 crore in 2010-11, mainly because of the problems the utilities are facing like no rise in tariffs for longer period by states and non-recovery of dues.

On the back of rising concerns relating to distribution companies, many banks have already started restructuring the loan accounts of these firms. Punjab National Bank, which had recast Rs 2,500 crore of loans in the second quarter, has said out of this amount as much as Rs 1,800 crore was from the Tamil Nadu SEB. Similarly, UCO Bank, Bank of Maharashtra along with 11 others had restructured around Rs 7,000 crore of loan extended to Uttar Haryana Bijli Vitran Nigam last month. Bank of Maharashtra has recast about Rs 1,100 crore of debt of the Rajasthan SEB. Industry experts say rising cases of debt recast in the power sector will increase the provisioning requirement of the banks. In case of any standard asset restructuring, the provisioning requirement for commercial banks will increase to 2 per cent from 0.4 per cent, which in turn will adversely impact their profitability.

Source: Business Standard

UCO Bank expects govt to infuse Rs 200-300 cr capital by March

State-owned Uco Bank expects the government to infuse Rs 200-300 crore by March to help the lender meet 8 per cent Tier-I capital requirement.

"The exact amount is not yet known but we are expecting anywhere between Rs 200 and Rs 300 crore by March to meet the eight per cent tier-I capital," Uco Bank Chairman and Managing Director Arun Kaul said today.

The bank's capital in December slipped to 7.79 per cent. The capital adequacy ratio, or CAR (as per Basel II norms), during the October-December quarter was 12.33 per cent, down from 13.02 per cent in the same period last fiscal, he said.

Uco bank also received capital infusion by the government in 2010-11.

The CRR cut by Reserve Bank of India will release some Rs 600 crore for the bank, he added.

Speaking about the change in interest rates, Kaul said there was no scope unless cost of funds reduces.

"In the December quarter, cost of funds jumped by 180 basis points while recovery was just to the tune of 145 points," he said.

Source: EconomicTimes

UCO Bank net profit rises 11% in Q3

Kolkata-based UCO Bank posted a 11 per cent rise in net profit to Rs 333 crore for the quarter ended December 31, 2011, against Rs 301 crore in the corresponding year-ago period.

Net interest income, however, dipped by three per cent to Rs 103 crore during the period under review.

Shares of UCO Bank rose by 3.71 per cent to close at Rs 71.30 on the BSE on Wednesday.

Kingfisher exposure

The bank witnessed fresh slippages to the tune of Rs 537 crore, of which, Rs 291 crore is due to its exposure to Kingfisher Airlines.

“We started the cleaning up of our balance-sheet last year. There are legacy issues which we are facing,” said Mr Arun Kaul, Chairman and Managing Director, UCO Bank.

The high cost of deposits has impacted the bank's net interest income and net interest margin, Mr Kaul said. NIM stood at 2.89 per cent (3.11 per cent).

“NIM would otherwise have been much more but for a 10 per cent rise in interest on deposits and large NPA,” he said.

The bank is however hopeful of keeping the NIM around 3 per cent by the end of the fiscal.

The percentage of gross and net non-performing assets to total advances increased to 3.49 (2.57) and 2.04 (1.13) respectively.

shobha@thehindu.co.in

UCO VASANTH BONANZA - Fixed Deposit Scheme

UCO Bank Launched a A limited duration Fixed Deposit Scheme providing benefits of high returns on a fixed deposit period of 100 days. The Scheme would be available from 4th January, 2012 for a limited period and would carry an interest of 9% per annum with special incentive for Senior Citizen/Staff/Ex-Staff, as usual. The minimum amount of deposit under the Scheme would be Rs. 10,000/- and in multiples OF Rs. 1,000/-.

The Scheme offers high returns for ONE HUNDRED DAYS term deposit period with a minimum deposit amount of Rs. 10,000/- and in multiples of Rs. 1,000/- shall be accepted under the Scheme. The rate of interest rate offered is 9.00% p.a.

 

The salient features of the UCO VASANTH BONANZA Scheme are as under:

SL. NO.	PARAMETER	DETAILED PARTICULARS
1.	Name of Scheme	“UCO VASANTH BONANZA” Fixed Deposit Scheme
2.	Duration of Scheme	4th January 2012  for a limited period only
3	Period of Deposit	100 days
4.	Amount of Deposit	Minimum Amount Rs.10, 000/- and in multiples of Rs. 1,000/-.
5.	Rate of Interest	9.00% per annum
5.	Premature Withdrawal	Withdrawals may be allowed prematurely, but in such a case the depositor would not be eligible to receive interest at the special rate. In case of premature withdrawal, the interest would be payable at 1% below the applicable rate under the normal fixed deposits for the period for which the deposit has remained with the Bank as on the date of deposit or present rate, whichever is lower.
7.	Loan/Overdraft against the Deposits	Available
8.	Nomination	Available
9.	Participating Branches	All UCO Bank Branches
10.	Automatic Renewals	No Permitted under this Scheme
11.	Tax Implications	Tax would be deductible at source as per the prevailing Income Tax rules.
12.	Special benefits for Senior Citizen/ Staff / Ex-Staff/Senior Citizen & Ex-Staff	Deposits from these categories of depositors shall be allowed incentive as per the existing norms. Accordingly, the applicable rates for these categories  of depositors would be as under: a)     Senior Citizen        : Additional 0.50% or @ 9.50% b)     Staff                       : Additional 1.00% or @ 10.00% c)    Ex-Staff                  : Additional 1.00% or @ 10.00% d)    Ex-Staff Sr. Citizen : Additional 1.25% or @ 10.25% The overall amount ceiling for Ex-Staff/Ex-Staff Senior Citizen for being eligible for higher rate under the scheme shall be equal to the terminal benefits plus Rs.10 lacs, as usual.

UCO Bank to auction a part of stressed assets

Kolkata based UCO Bank has decided auction its bad loans in a bid to lower its non performing assets. It has called for bids from investors for a stressed portfolio of Rs 327 crore comprising 45 loan accounts.

These 45 accounts includes assets like J B Diamond, Ind Synergy and Asian Electronics, officials from banking industry told ET on condition of anonymity. A number of asset reconstruction companies are likely to bid, they added.

The bad loan market usually becomes active in the second half of a fiscal year as bank tries to meet annual targets by selling stressed assets. However not many banks have tapped the bad loan market so far this year.

UCO Bank's gross non performing assets stood at 3.64% or Rs 3542 crore of total loans for September ending 2011 against 2.39% or Rs 2058 crore a year ago.

Interestingly, UCO Bank had put on block a small portion of their bad loan in November 2011 but it has yet not declared results.

Source: EconomicTimes

Uco Bank plans to open 11 more branches in AP

The Uco Bank is planning to open 11 more branches in Andhra Pradesh, in addition to the existing 66, and two of the new branches will be in Visakhapatnam region, according to Mr Khaleel Bhasha, the Assistant General Manager.

He was talking to reporters here on Friday after the inauguration of personal banking branch at Dwarakanagar, on the occasion of the bank's foundation day. He said the bank had made great strides in recent times, with 2,004 branches in the country and four abroad. The deposits as on December 31, 2011, stood at Rs 1,32,636 crore and advances Rs 97,825 crore.

He said that on the occasion of the foundation day,a credit camp had been organised in the branch. A prawn processing unit, set up by Seven Seas Aqua, was sanctioned Rs 2 crore and Mr Srinivas, the Managing Director, received the sanction letter. Self-help groups were sanctioned Rs 35 lakh, and a sum of Rs 40 lakh was also sanctioned for purchase of commercial vehicles to different customers.

Mr Bhasha said greater stress would be laid on retail lending at the branch. He said all the branches of the bank were networked and having core banking solutions. The bank had also launched “bank on wheels” for the first time in the country. A number of villages had been adopted under the financial inclusion scheme and the bank had also launched Uco Uthan, a scheme for the families below the poverty line.

UCO Bank to auction up to Rs 400 cr of NPAs

UCO Bank will hold open auction next week for sale of Rs 300 crore to Rs 400 crore non-performing assets (NPA).

"We will auction for sale of Rs 300 crore to Rs 400 crore of NPAs next week," Chairman and Managing Director of UCO Bank Arun Kaul said.

"We had one round, we did not get a good response and we did not sell anything," Kaul told reporters on the occasion of the bank's 69th year celebrations.

Kaul said he was confident the sale would come through by March.

About capital infusion, he said we had sought funds from the government. "We are working out that [capital infusion from the government]...We have given some projections to government. Let us see what happens," Kaul said.

The bank's credit growth was 19.16% as of December-end, Kaul said. "I am confident of achieving the 18% stipulation of the apex bank by March-end."

He said the bank has no immediate plans to change the current base rate of 10.7%.

"We have no plans to change the base rate right now unless some monetary policy changes take place," Kaul said.

Source: Business Standard

No second round of debt restructuring for Kingfisher by banks

Banks have no plans to carry out a second round of debt restructuring of the ailing Kingfisher Airlines which has an outstanding loan of around Rs 6,419 crore, Parliament was informed on Friday.

“State Bank of India, leader of the consortium (of 11 lenders to Kingfisher), has stated that at present, there is no plan,” Minister of State for Finance, Mr Namo Narain Meena, said in a written reply in Lok Sabha.

He was replying to a question on whether lenders are planning to carry out a second round of restructuring of loans to help Kingfisher.

The Minister further said the airline has a total outstanding loan liability of Rs 6,419.60 crore, which include Rs 9,730.37 crore provided to Kingfisher for non fund based activities.

SBI, the minister said, has an exposure of Rs 1,457.78 crore, followed by IDBI Bank (Rs 727.63 crore), Punjab National Bank (Rs 710.33 crore), Bank of India (Rs 575.27 crore) and Bank of Baroda (Rs 537.51).

The other lenders which have provided funds to the airlines include ICICI Bank, Central Bank of India, United Bank of India, UCO Bank, and Corporation Bank.

SBI has already exceeded the exposure limit of Rs 1,436.1 crore in Kingfisher.

Of the total outstanding of Rs 6,419.60 crore, Rs 750.10 crore has been converted into cumulative redeemable preference shares and Rs 553.10 crore as non convertible cumulative redeemable preference shares to be redeemed after 12 years.

Mr Meena further said that Kingfisher is scheduled to start repaying loans to SBI from September 2012. “Servicing of interest is being done with some delay,” he added.

Payments crisis: RBI allows Iranian central bank to open A/Cs with UCO and IDBI

KOLKATA: In an effort to resolve a long-standing payment crisis, the Reserve Bank of India (RBI) has given permission to the Central Bank of Iran to open rupee accounts with two Indian banks, namely UCO and IDBI.

"Permission from the RBI has very recently come to open rupee accounts with two Indian banks, one of which is UCO," a top official of city-based UCO Bank said.

The other bank is IDBI Bank. Both the accounts were opened in the respective banks' Mumbai branches.

The official said since the closure of the Asian Clearing Union (ACU) in December, payments for oil imports from Iran and non-oil exports to that country have been severely affected.

The UCO official said there was some understanding between the RBI and the Iranian central bank about the mechanism of making payments.

He said that the Iranian central bank would park funds in the two Indian banks to enable payments for oil imports by India as well as non-oil exports to Iran.

To a query, he said it was not yet known whether the Iranian central bank had already parked funds in the two accounts.

The official said while payments for oil imports would initially be in rupees, it would be then converted into a separate currency, which was yet to be decided by the apex bank.

Meanwhile, the tea industry is deeply worried about non-payment for shipments made to Iran since December last year.

The Secretary of the Indian Tea Association (ITA), M Dasgupta, said since payment through the ACU ceased, no letters of credit could be opened by Iranian importers with any Indian commercial bank due to US sanctions.

He said unless the problem was resolved, orthodox tea producers would be hard-pressed, as they would have to hold on to their stocks.

The ITA official said Iran was an importer of high-value orthodox tea, which fetches an average price of Rs 190 per kilogram, as compared to Rs 145 per kilogram for other varieties of tea.

The other fear was that producers might lower production of orthodox tea to shift to other varieties like CTC.

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

LIC eyes 5% sales from bancassurance

Life Insurance Corporation of India (LIC) is looking at a huge jump in premium collected through bancassurance, amid increasing competition from private players.

Life Insurance Corporation collected Rs 1,281 crore in premium through bancassurance, which involves using bank branches for selling policies and collecting premia, FY11. This accounted for a little over 0.60% of the total premium collection of Rs 2,03,358 crore.

The corporation sold 7 lakh new policies through this channel during 2010-11.

"Target for the current year is that we want to get 5% of our total premium from bancassurance. And 5% of LIC's premium is huge, you have to realise that," LIC Executive Director (Corporate Communications) Vipin Anand said.

However, he said leveraging the channel was not easy.

"Definitely the scope is much more. Only thing is - for banks which do not own an insurance company, insurance is not very high on priorities. That is the reality, we have to understand that," Anand said.

"If the insurance company is owned by a bank, there is an entirely different kind of a stake...Their mainstay [of distribution] is going to be the bank," he added.

LIC has tie-ups with various banks, including Corporation Bank, United Bank of India, Bank of Maharashtra and UCO Bank.

Anand further said that LIC's 1.337 million agents are its mainstay and it should not be compared with the private sector insurers which count banks as promoters.

Source: Business Standard

Government to sanction Rs 2,000 cr capital infusion for few banks

NEW DELHI: The government has decided to sanction Rs 2,000 crore to some public sector banks as part of its recapitalisation drive.

"We are in the process of sanctioning Rs 2,000 crore to a few public sector banks, but the the disbursement would take place at later date," official sources told PTI.

The mode of disbursement would be decided later, sources said, adding, the capital infusion would result in raising tier I capital or equity capital of the bank.

Besides, the capital infusion would result in enhancing government's stake in the select banks, sources said.

This is part of the Rs 6,000 crore re-capitalisation amount for the public sector banks announced in the Budget this year.

Finance Minister Pranab Mukherjee in his Budget speech had said, "During the year 2010-11, the government is providing a sum of Rs 20,157 crore for infusion in the Public Sector Banks to maintain Tier I Capital to Risk Weighted Asset Ratio (CRAR) at 8 per cent and increase government equity in some banks to 58 per cent".

"I propose to provide a sum of Rs 6,000 crore for the year 2011-12 to enable Public Sector Banks to maintain a minimum tier I CRAR at 8 per cent," he said.

Most of the public sector banks got capital support from the government during the last fiscal. These banks included Punjab National Bank, Bank of Baroda, Union Bank of India, Oriental Bank of Commerce, UCO Bank and Dena Bank.

In the first phase of recapitalisation in June last year, the government had approved capital support of Rs 6,211 crore into five banks. The banks, which had got capital from the government included Union Bank of India, Bank of Maharashtra, IDBI Bank, UCO Bank and Central Bank India.

Remaining Rs 13,946 crore was disbursed by March, 2011 through mostly preferential allotment of equity.

All the public sector banks have already submitted to the government their capital requirement.

The bank has requested the government capital infusion of Rs 990 crore to fund its business growth, Punjab & Sind Bank Executive Director P K Anand said.

"We have requested the government to infuse additional capital of Rs 990 crore by way of preferential shares," Anand

had said earlier this month.

Mangalore-based Corporation Bank has also sought Rs 300 crore capital support from the government.

Source: EconomicTimes

UCO Bank hikes term deposit rates

UCO Bank has hiked interest rates by 25-200 basis points on term deposits of various tenures effective August 22. 

The hike will be applicable on deposits up to Rs 5 crore, according to a press release issued by the bank.