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Bank of India plans to sell stake in subsidiaries to raise capital

LiveMint logoLiveMint 04-06-2017 PTI

New Delhi: Saddled with bad loans, Bank of India (BoI) is exploring the possibility of selling stake in some subsidiaries to unlock capital and turn the corner.

“We sold stake in some of the subsidiaries and we are exploring opportunities to divest stake in some other non-core subsidiaries depending on right valuation,” BoI executive director N. Damodaran told PTI. He added however that it would be difficult to give a timeline and share numbers. “We are focusing on certain non-core subsidiaries to divest with an aim to unlock capital...it will also help the bank get into the black this fiscal,” he said.

The bank’s gross non-performing assets (NPAs) or bad loans were restricted to 13.22% of the gross advances at the end of March 2017, marginally higher than 13.07% a year ago. Net NPAs however declined to 6.90% of the net advances at the end of last fiscal, as against 7.79% a year earlier.

For the fiscal ended March 2017, the bank reported a net loss of Rs1,558 crore as against a net loss of Rs6,089 crore in the fiscal ended 31 March 2016. It also narrowed its fourth quarter losses to Rs1,046 crore from Rs3,587 crore in the year-ago period. Last year, the Mumbai-based lender sold 18% stake in Star Union Dai-ichi Life Insurance Company to its Japanese partner for Rs540 crore, valuing the company at Rs3,000 crore. Following the transaction, Japan-based Dai-ichi Life Insurance Company’s share went up to 44% and became the single largest promoter of the company. BoI’s share came down to 30% while Union Bank of India retained its holding at 26%.

Earlier this year, the bank also sold its entire 5% stake in credit information firm TransUnion CIBIL Ltd to TransUnion International Inc. for Rs190.62 crore. The bank has various subsidiaries and associates including BOI AXA Investment Managers Pvt Ltd, Central Depository Services (India) Ltd, National Collateral Management Services Ltd, SME MRating Agency of India Ltd, BOI Shareholding Ltd, BOI Merchant Bankers Ltd, STCI Finance Limited and ASREC (India) Limited.

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