Financial Daily from THE HINDU group of publications
Friday, Jun 10, 2005
Financial Daily from THE HINDU group of publications Friday, Jun 10, 2005 |
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Money & Banking
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Public Sector Banks Dena Bank drops plan to join StanChart-promoted ARC Priya Nair
Mumbai , June 9 DENA Bank has decided not to join the proposed asset reconstruction company (ARC) to be promoted by Standard Chartered Bank, according to Mr M.V. Nair, Executive Director, Dena Bank. The bank, which was earlier considering taking a stake in the company, has decided to withdraw from the project due to capital constraints. "We revaluated the project and decided against taking a stake in the ARC. We want to preserve as much capital as we can for our internal growth and expansion," Mr Nair said. Currently, Dena Bank's capital adequacy ratio is 11.91 per cent. As the Government holding in the bank is just above 51 per cent, it cannot dilute the Government stake to raise more capital. The bank may sell its NPAs for a sum, but is not willing to invest fresh capital in the new ARC. It has adopted a four-pronged growth strategy in this fiscal and is targeting 24 per cent growth, for which it will require additional capital, said Mr Nair. The ARC, which has been registered as Special Asset Recovery Private Ltd, is being promoted by six banks, with Standard Chartered Bank holding majority stake, according to Mr Vinayak Bahuguna, Regional Head, Special Assets Management Team (India and Nepal), Standard Chartered Bank. Some of the other banks that may take stake in the ARC are Central Bank of India, Oriental Bank of Commerce, and Union Bank. The project is awaiting approvals from FIPB and the Reserve Bank of India, which may take a few weeks. Standard Chartered Bank is taking a lead position in the ARC and is looking to take as high a stake as possible under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interests Act, Mr Bahuguna said. "We may take as much as 49 per cent. We want to restrict the number of stakeholders to six, including ourselves. Private and public sector banks will be part of it." The larger stakeholders will have 10-15 per cent stake, while the smaller players will have about 5-10 per cent, he added.
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