Financial Daily from THE HINDU group of publications
Tuesday, Jun 22, 2004
Financial Daily from THE HINDU group of publications Tuesday, Jun 22, 2004 |
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Money & Banking
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Non-Performing Assets Corpn Bank to pick 11 pc stake in ARC Dinesh Narayanan
Mumbai , June 21 CORPORATION Bank plans to pick up 11 per cent stake in an asset reconstruction company (ARC) being set up by ING Vysya Bank and Actis, a British private equity firm. A top banking industry source said Corporation Bank's board of directors has cleared a proposal to invest Rs 11 crore to buy the equity stake in the proposed Rs 100-crore ARC. Corporation Bank would also have representation on the ARC board. While ING Vysya is already in talks with Actis to sell distressed assets worth about Rs 400 crore to the private fund, Corporation Bank would keep its options open regarding sale of its own stressed assets to the ARC, it is understood. The source said as activity in the asset reconstruction industry picks up competition from different players would help lenders get better prices for bad assets. Restructuring of non-performing assets is a nascent business in the country India and only three other asset reconstruction companies - Asset Care Enterprises promoted by IFCI and a host of public sector banks, Asset Reconstruction Company (India) Ltd promoted by ICICI Bank and SBI and Asrec, promoted by UTI and a clutch of foreign banks - have as yet begun operations. ARCs buy distressed assets from banks and financial institutions at a discount and either sell them off after restructuring or securitise them into what are commonly called junk bonds, which are then traded on exchanges. Actis was created last year from CDC Capital Partners, a private fund of the British Government. A leading investor in emerging markets, it currently manages CDC's assets worldwide. It has invested about $250 million in India. Actis recently sold a little under 15 per cent of its stake in UTI Bank to HSBC.
More Stories on : Non-Performing Assets | Public Sector Banks
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