http://www.moneyspidery.com/2012/02/07/lic-to-pick-5-pct-stake-in-dena-bank/
MUMBAI
(Reuters) – State-run insurer Life Insurance Corp (:LICLICnull) will
pick up a 5 percent stake in small-sized lender Dena Bank Ltd
(:DENA.NSDENA.NS), helping the state-run bank shore up its capital base
and boosting its shares.
Dena Bank’s board on Monday approved preferentially allotting shares
to LIC, which could help it raise between 1 to 1.5 billion rupees, a top
official of the lender said.
Last week, the government agreed to inject $1.6 billion in the country’s largest lender State Bank of India (:SBI.NSSBI.NS) through a share purchase, setting the tone for bolstering capital base of state banks.
Several government-run banks, which account for 70 percent of lending in Asia’s third-biggest economy, need to raise capital urgently to strengthen balance sheets eroded by fast loan growth and worsening asset quality as economic growth slows.
But Dena Bank, with a capital adequacy ratio at 11.58 percent, is better placed than some of its peers.
“We don’t have plans to raise anymore funds. We will take a view of any further raising depending upon the market,” Chairwoman Nupur Mitra told reporters.
Dena Bank has sought 5 billion rupees from the government in the next 3-4 years to meet Basel III norms.
“Still, the bank is capable of growing its balance sheet/assets without relying on the government, at least for the next 2-3 years due to strong growth in profits,” Executive Director Ashok Dutt said.
Earlier, the state-run bank posted a 20 percent growth in net profit to 1.87 billion rupees on the back of growth in loans and better asset quality. Its net interest margin, a key gauge of profitability for banks, rose 6 basis points to 3.3 percent.
Net non-performing assets fell to 1.1 percent from 1.26 percent a year earlier, the bank said.
Shares in Dena Bank, valued at $500 million by the market, rose 8.7 percent in a firm Mumbai market.
MUMBAI
(Reuters) – State-run insurer Life Insurance Corp (:LICLICnull) will
pick up a 5 percent stake in small-sized lender Dena Bank Ltd
(:DENA.NSDENA.NS), helping the state-run bank shore up its capital base
and boosting its shares.Last week, the government agreed to inject $1.6 billion in the country’s largest lender State Bank of India (:SBI.NSSBI.NS) through a share purchase, setting the tone for bolstering capital base of state banks.
Several government-run banks, which account for 70 percent of lending in Asia’s third-biggest economy, need to raise capital urgently to strengthen balance sheets eroded by fast loan growth and worsening asset quality as economic growth slows.
But Dena Bank, with a capital adequacy ratio at 11.58 percent, is better placed than some of its peers.
“We don’t have plans to raise anymore funds. We will take a view of any further raising depending upon the market,” Chairwoman Nupur Mitra told reporters.
Dena Bank has sought 5 billion rupees from the government in the next 3-4 years to meet Basel III norms.
“Still, the bank is capable of growing its balance sheet/assets without relying on the government, at least for the next 2-3 years due to strong growth in profits,” Executive Director Ashok Dutt said.
Earlier, the state-run bank posted a 20 percent growth in net profit to 1.87 billion rupees on the back of growth in loans and better asset quality. Its net interest margin, a key gauge of profitability for banks, rose 6 basis points to 3.3 percent.
Net non-performing assets fell to 1.1 percent from 1.26 percent a year earlier, the bank said.
Shares in Dena Bank, valued at $500 million by the market, rose 8.7 percent in a firm Mumbai market.
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