http://www.livemint.com/Industry/mPKkdr1HJN6g8HUNCto82L/Public-sector-banks-delay-decision-on-noncore-assets-over-v.html
“These things cannot be done fast. We have to discover value. There is no reason for us to do a fire sale, we are not in that position,” Bhattacharya said.
Following the bank’s third quarter earnings release on 11 February, Bhattacharya said that the bank would be looking to offload non-core assets as one of the options to raise capital.
SBI’s holdings in its various subsidiaries and joint ventures were pegged at Rs.9,781 crore as of March 2015, according to the bank’s annual report. Some of its non-core assets include a 26% stake in Clearing Corp. of India (CCIL), 10.9% shareholding in National Stock Exchange (NSE) Ltd, 6.42% stake in Infrastructure Leasing and Financial Services (IL&FS) Ltd and 9.57% in Central Depository Services (India) Ltd (CDSL).
To be sure, SBI is not in urgent need of capital and can afford to wait until an appropriate time. The bank’s capital to risk-weighted assets ratio (CRAR) was at 12.45% as of 30 December and its tier-I ratio was 9.64%. Present norms under Basel III require banks to maintain a minimum total CRAR of 9% and a tier-I ratio of 7%.
Bankers, however, are not convinced that the process will be an easy one. “These are unlisted assets. Even if banks find out the valuation, which can be done by investment bankers, how do we find an investor? And these are bulk quantities of stake sale. Finding an investor in the present market scenario becomes tough and this is why the exercise is taking time,” said R.K. Takkar, managing director and chief executive officer at UCO Bank.
“To get a good valuation and to get a buyer at that valuation is a challenge,” said Takkar.
Lack of buyers and valuation concerns have prevented quick exits from investments in entities like NSE. Investors, including SBI, are pitching for a listing of the exchange which will provide an easier exit route.
Public sector banks will need to raise a total of Rs.3.3 trillion in tier-I capital between fiscal 2016 and 2019, according to rating agency ICRA. The government has committed to infuse Rs.70,000 crore into lenders over this period, but most expect this amount to be increased in light of the exercise to clean up bad loans.
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