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Nov 28, 2006

Bank Stock News

UBS picks up stake in UTI Bank UBS Securities Asia Ltd has picked up nearly 2.5 per cent stake of UTI Bankfor Rs 344.58 crore in open market transaction. UBS Securities has acquired69.33 lakh equity shares at Rs 497 each, representing 2.47 per cent stake ofthe private bank in a block deal on the Bombay Stock Exchange.

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Corpn Bank ties up with India Post In tune with intensifying its efforts to serve the rural community moreeffectively, Corporation Bank has initiated a process to sell its loanproducts in villages with the help of India Post. Corporation Bank, inassociation with India Post, has launched 'Corp Gram Mitra Yojana' asecurity-free consumption loan scheme for rural beneficiaries. To beginwith, the scheme has been introduced on a pilot basis in Goa. This tie-upbrings benefits to all stakeholders post office by way of fee income,borrowers by way of credit on easy terms, and the bank by way of newbusiness. The maximum amount of loan will be Rs 20,000, repayable along withinterest within two years in the form of monthly instalments. Applicationand documentation of loans will be done through the designated post officesin the respective places. Ms Noorjehan, Principal Chief Postmaster General,Maharashtra Circle, formally launched 'Corp Gram Mitra Yojana', at Nagoa inGoa. Mr K.L. Gopalakrishna, Executive Director of the bank, presided. Bank of Rajasthan plans insurance foray Private sector Bank of Rajasthan plans to get into life and generalinsurance businesses, after shoring up its net worth to Rs 1,000 crore in 18months, Director Mr Pravin Kumar Tayal said. The bank, he said, would set upseparate subsidiaries for the new ventures, joining many other banks vyingfor the country's fast growing but underserved life insurance market. Bankof Rajasthan now has a net worth of Rs 450 crore. BoJ rate hike 'any time now' The Bank of Japan Governor, Mr Toshihiko Fukui, reiterated that an interestrate hike could come at any time amid a strong economic recovery. The Bankof Japan's Policy Board voted unanimously to keep interest rates at 0.25 percent on November 16. The market is braced for a rate hike next month or inearly 2007. New norms to boost foreign bank lending Barclays Bank's total lending in India is just over Rs 4 crore, but itsoff-balance sheet liabilities are over Rs 2,50,000 crore. If the RBI goesahead and implements its revised priority sector lending guidelines fromApril 1, 2007, then the British bank will have to lend over Rs 1,200 croreto priority sectors. That's because the draft guidelines propose to useeither the net bank credit or credit equivalent of off-balance sheetexposure as the base for calculating bank's priority sector lendingobligations. The average credit equivalent of OBS for the entire bankingsystem about 1.9 per cent of the total contingent liabilities. The number ofbanks which are actively involved in these activities in India are only 15,most of which are foreign banks. The combined share of these 15 banks intotal off-balance sheet exposures steadily increased from 73.8 per cent inMarch 2002 to 82.3 per cent in March 2006. The growth in OBS exposures inIndia has been fuelled by the phenomenal increase in derivatives segment.

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66 Union Bank ATMs at rly stations Union Bank of India has tied up with Indian Railways to provide a host ofservices to the commuters, including Internet ticketing. The bank has signeda memorandum of understanding with Indian Railways for opening of 66 ATMs atvarious railway stations throughout the country. It would also set up aseparate kiosk to provide Internet ticketing service to passengers. Also,the ATMs would provide cash withdrawals, balance enquiries, fund transfer inown account and also prepaid mobile top ups, the bank said in a releasehere. The bank has a network of 611 ATMs and aims to install 1,000 ATMsthroughout the country by March 2007. YES Bank plans to raise $90 m YES Bank Ltd, a two-year-old Indian bank partly owned by Rabobank Group ofthe Netherlands, plans to raise $90 million selling shares and bonds byMarch to fund expansion, said the Chief Executive, Mr Rana Kapoor. TheMumbai-based bank plans to have 60 branches by June, Mr Kapoor toldpresspersons in New Delhi on Sunday. YES Bank said it planned to raise atotal of $150 million for expansion. YES Bank is also raising Rs 180 crore($40 million) selling debt maturing in nine years and six months payinginvestors a coupon of 9.1 per cent, Mr Kapoor said American Dream for SBI, ICICI Bank State Bank of India and ICICI Bank, India's two largest banks, will spreadtheir operations in the US. According to senior government officials,following the government's talks with the US authorities, India's twoleading lenders may well be granted approval for fresh branch licences inthe next six months. Part of the problem can be traced to the fact that SBIwas fined $7.5 million in 2001 by the US regulators for what was seen as thebank's failure to put in place anti-money laundering safeguards. The banksubsequently agreed to pay the fine imposed both by the US treasury and theNew York State Banking Department. SBI has operations in New York, Chicago,Los Angels and Washington, while ICICI is seeking an entry into the US aftermaking some inroads into the UK and Canadian markets. The government and RBIhave said that they have been liberal in approving branch licensingproposals from foreign banks way above the annual cap of 12. Bajaj Allianz, Centurion Bank headed for a long legal battle The dissolution of the erstwhile partnership between Bajaj Allianz LifeInsurance and Centurion Bank of Punjab is embroiled in a major feud and thetwo parties may end up in arbitration. A couple of months after the mergerof Bank of Punjab and Centurion Bank in June last year, the merged CenturionBank of Punjab (CBoP) had called for fresh bids from insurers since eachbank had different partners. Existing regulations do not allow a bank tosell policies of more than one life insurers. The bank had indicated it hadchosen Aviva because the geographies in which the firm was present matchedbank's requirement. It had also said it would continue to service customersto whom it had sold Bajaj Allianz policies, and would not try to convertthem into becoming Aviva's policy holders. Another reason for the change wasthat Bajaj Allianz was pursuing a strategy of growing its agency force andCBoP saw this as an area of potential conflict. However, the decision to gowith Aviva didn't go well with Bajaj Allianz.