The Hindu Business Line : Syndicate Bank to get $100-m credit line from Wachovia

CREDIT LINE PACT: Mr Charles Silverman, Wachovia Bank MD and Head of India sub continent & Southeast Asia group, and Mr C. P. Swarnkar, Syndicate Bank CMD, after signing a $100 million credit line agreement.

Bangalore , Dec. 22

Syndicate bank has negotiated a line of credit of $100 million from Wachovia Bank N A on a bilateral basis.

The agreement for the credit line was signed in Hong Kong between Syndicate Bank's Chairman and Managing Director, Mr C.P. Swarnkar, and Mr Charles Silverman, Managing Director and Head of the India Sub-Continent and Southeast Asia group for Wachovia. The bilateral credit line cuts the lead-time of funds availability, generally associated with loan syndications.

Mr Swarnkar told Business Line, "We intend using the credit line to fund the expansion of our London branch. Besides, some of our existing lines of credit have matured."

Accordingly, the funds would be used to shed the loans that have already matured. The line of credit was for one year, he said. Besides, the bank also intended utilising the funds for its East Asian operations.

Eyes more markets

The bank was also considering entering strategic global financial centres such as Singapore, China, and Hong Kong etc., to service the needs of Indian trade interests in that country. Accordingly, the funds would also be utilised for trade financing in the region, he added.

The bank has a strategic objective of achieving a global business of Rs 1.27 lakh crore by March 2007 and Rs 2.5 lakh crore by 2011, thereby positioning it among top league banks. Mr Swarnkar said.

Competitive pricing

Mr Swarnkar was, however, unwilling to reveal the pricing of the line of credit said. "It is a bilateral deal. Details therefore are confidential." But bankers said that Syndicate Bank had managed to wrest an extremely competitive pricing from Wachovia. Banking sources said that the pricing was in the region of 25 basis points over the six month London Inter Bank Offered Rate.

The last major foreign currency borrowing by a state-owned bank was the medium term note issue by Canara Bank. Canara Bank's $250 million, 15 year MTN, last month was priced at 125 basis points over six month LIBOR. Bankers said that the shift in pricing indicated a change in perception of the India risk. This was despite the conservative view of some the global rating agencies, where India continues to be in the speculative grade.