London December 30, 2009, 17:29 IST
The administrators of the European operations of the failed Lehman Brothers will return assets worth over $11 billion to the investors.
More than 90 per cent of the affected investors at Lehman Brothers International Europe are in support of the plan to return the assets.
PricewaterhouseCoopers (PwC)-- whose partners are the administrators -- today said it got the support of over 90 per cent clients for the claim resolution agreement (CRA).
The CRA, a multilateral contract between Lehman Brothers Europe and its clients, governs the basis on which assets can be returned.
"Under these arrangements, the administrators expect to return over $11 billion of the client assets," PwC said in a statement.
Lehman Brothers Europe had some $32 billion of client assets as on September 15, 2008 -- the day, when its American parent firm Lehman Brothers filed for bankruptcy in the US. Since that date, $13.3 billion has been returned.
According to the statement, the agreement allows the failed financial titan to distribute the remaining trust property during 2010.
The collapse of the famed Lehman Brothers had worsened the financial turmoil in the US which pushed the global economy into a tizzy.
Wednesday, December 30, 2009
Borrowers make merry in 2009
Kumar Dipankar/PTI / New Delhi December 30, 2009, 15:57 IST
2009 was mostly bad news for countries, governments and individuals in terms of economic prosperity, but the year was the best in many years for borrowers as interest rates eased.
Much to the delight of borrowers, home and car loan rates came down to as low as 8 per cent, the lowest in six years, during the year.
As early as February, 2009, the country's largest lender State Bank of India introduced special home loan scheme offering loans at eight per cent and by the end of the year, other big names such as HDFC and ICICI Bank had joined the rate war.
The winner, however, was the borrower.
Even car loan rates came down to 8 per cent from as high as 14 per cent in some cases. Those who were in the habit of saving, however, suffered a rude shock when peak deposit rates fell in a phased manner by 400-600 basis points.
As far as Reserve Bank's (RBI) policy rates were concerned, they remained at the lowest level as part of an effort to perk up economy.
The repo rate, the rate at which banks borrow from RBI in exchange of government bonds, was at 4.75 per cent, reverse-repo at which the apex bank accepts deposits from banks at 3.25 per cent and Cash Reserve Ratio, the portion of cash banks park with the Reserve Bank, at 5 per cent.
"The year 2009 was quite eventful for banks and it showed the resilience of the system to a huge crisis in related markets," Bank of Baroda chairman and managing director M D Mallya said.
"As we move ahead, when we shun the impact of slowdown, I expect the bank credit growth to revive considerably, which may result in upward movement of lending rates as well."
Moreover, galloping inflation is also putting pressure on the central bank to tighten monetary stance, which hitherto has been dovish.
A hike in cash reserve ratio, the percentage of amount banks should keep with RBI, will help to mop up the excess liquidity, after which RBI could start raising repo rate and reverse repo rate to exit from the easy money regime, bankers said.
At present, there is enough liquidity in the system. RBI may actually start pumping out liquidity through a CRR hike by around 25-50 basis points in January, Jammu & Kashmir Bank chairman Haseeb Drabu said.
Such move by RBI would automatically signal hike in interest rates in the system.
Interestingly, the talks on consolidation in the public sector banks began during the year as the Finance Ministry held a discussion with leading PSU banks to explore the possibility of creating a few large banks through mergers and acquisitions.
Heads of five major PSU banks -- Punjab National Bank, Bank of Baroda, Canara Bank, Union Bank of India and Bank of India -- attended the meeting called by Additional Secretary G C Chaturvedi in November.
Bankers expect the consolidation talks in the Indian banking system to gain momentum in 2010 both in public and private sectors, as it is warranted by evolving competition in the global banking space.
In a bid to strengthen the banking system, RBI proposed to increase provision coverage for the banks to not less than 70 per cent by September 2010. Increase in provision coverage could dent profits (mainly for SBI and ICICI Bank) in the next three-four quarters, an analyst said.
At the same time, a Reserve Bank panel recommended that loans should be given at interest rates that are linked to a defined minimum base rate instead of the present benchmark prime lending rate (BPLR) to ensure transparency.
Linking lending rates to base rate would address the concerns relating to growing sub-BPLR portfolio of banks, the RBI had said.
Under the proposed mechanism, all banks will be required to declare a base rate and charge interest rates over that depending upon the credit profile of the borrower and repayment period.
2009 was mostly bad news for countries, governments and individuals in terms of economic prosperity, but the year was the best in many years for borrowers as interest rates eased.
Much to the delight of borrowers, home and car loan rates came down to as low as 8 per cent, the lowest in six years, during the year.
As early as February, 2009, the country's largest lender State Bank of India introduced special home loan scheme offering loans at eight per cent and by the end of the year, other big names such as HDFC and ICICI Bank had joined the rate war.
The winner, however, was the borrower.
Even car loan rates came down to 8 per cent from as high as 14 per cent in some cases. Those who were in the habit of saving, however, suffered a rude shock when peak deposit rates fell in a phased manner by 400-600 basis points.
As far as Reserve Bank's (RBI) policy rates were concerned, they remained at the lowest level as part of an effort to perk up economy.
The repo rate, the rate at which banks borrow from RBI in exchange of government bonds, was at 4.75 per cent, reverse-repo at which the apex bank accepts deposits from banks at 3.25 per cent and Cash Reserve Ratio, the portion of cash banks park with the Reserve Bank, at 5 per cent.
"The year 2009 was quite eventful for banks and it showed the resilience of the system to a huge crisis in related markets," Bank of Baroda chairman and managing director M D Mallya said.
"As we move ahead, when we shun the impact of slowdown, I expect the bank credit growth to revive considerably, which may result in upward movement of lending rates as well."
Moreover, galloping inflation is also putting pressure on the central bank to tighten monetary stance, which hitherto has been dovish.
A hike in cash reserve ratio, the percentage of amount banks should keep with RBI, will help to mop up the excess liquidity, after which RBI could start raising repo rate and reverse repo rate to exit from the easy money regime, bankers said.
At present, there is enough liquidity in the system. RBI may actually start pumping out liquidity through a CRR hike by around 25-50 basis points in January, Jammu & Kashmir Bank chairman Haseeb Drabu said.
Such move by RBI would automatically signal hike in interest rates in the system.
Interestingly, the talks on consolidation in the public sector banks began during the year as the Finance Ministry held a discussion with leading PSU banks to explore the possibility of creating a few large banks through mergers and acquisitions.
Heads of five major PSU banks -- Punjab National Bank, Bank of Baroda, Canara Bank, Union Bank of India and Bank of India -- attended the meeting called by Additional Secretary G C Chaturvedi in November.
Bankers expect the consolidation talks in the Indian banking system to gain momentum in 2010 both in public and private sectors, as it is warranted by evolving competition in the global banking space.
In a bid to strengthen the banking system, RBI proposed to increase provision coverage for the banks to not less than 70 per cent by September 2010. Increase in provision coverage could dent profits (mainly for SBI and ICICI Bank) in the next three-four quarters, an analyst said.
At the same time, a Reserve Bank panel recommended that loans should be given at interest rates that are linked to a defined minimum base rate instead of the present benchmark prime lending rate (BPLR) to ensure transparency.
Linking lending rates to base rate would address the concerns relating to growing sub-BPLR portfolio of banks, the RBI had said.
Under the proposed mechanism, all banks will be required to declare a base rate and charge interest rates over that depending upon the credit profile of the borrower and repayment period.
No Rate Hike for 6 Months- SBI
NEW DELHI: India Inc can rejoice. State Bank of India chairman OP Bhatt on Tuesday indicated that there will be no increase in interest rates for next six months despite inflationary pressure.
As inflation is rising, the speculation is rife that RBI might take measures to tighten the money supply, leading to hardening of interest rates, in its review of monetary policy in January. As the global economy is still in the grip of recession, industry captains feel that any hike in interest rates will affect the economic recovery in India.
Bhatt said there was surplus liquidity in the system and credit offtake was slowly picking up. This situation of liquidity surplus will force banks not to increase interest rates. Because of this surplus liquidity, banks have cut deposits rates. But they are not cutting the lending rates due to slow credit offtake, despite the speculation that RBI can increase key rates (repo or reverse repo) to contain inflation.
In the eight months of the current financial year till December 4, while the deposits with the commercial banks rose by 3,69,535 crore, credit offtake was only Rs 1,44,151 crore. This forced the banks to park around Rs 100,000 crore with the RBI at reverse repo rate of 3.25%.
When the interest rate condition was benign, SBI had cut its lending rates, particularly home loan rate. Bhatt claimed that the 8% interest rate on home loan announced by SBI had helped reviving real estate market. The buyers have started coming back and cement and steel sectors have also started improving, he said. In fact, SBI's decision to cut the rates forced other banks to follow suit, he added.
Bhatt does not think Indian economy had been affected by global recession. "The recession did not hit India the way it had affected European countries last year. There was only a slowdown in the growth rate which came down to 7% from 9%," he said.
Replying to a question on withdrawal of stimulus package by the government in the prevailing situation, Bhatt said it should not be taken back but 'phased out' in staggered manner.
Referring to the ongoing merger process of SBI associate banks, Bhatt said SBI is a major stakeholder in SBI associate banks like State Bank of Saurashtra and State Bank of Indore. "In fact, we did not have less than 75% stake in any of these banks and owned 100% in State Bank of Hyderabad and State Bank of Patiala which were with us for the last 50 to 60 years," he said.
State Bank of Saurashtra has merged while process was on in regard to State Bank of Indore, Bhatt said. The merger would improve SBI in terms of efficiency in operation, release of capital.
As inflation is rising, the speculation is rife that RBI might take measures to tighten the money supply, leading to hardening of interest rates, in its review of monetary policy in January. As the global economy is still in the grip of recession, industry captains feel that any hike in interest rates will affect the economic recovery in India.
Bhatt said there was surplus liquidity in the system and credit offtake was slowly picking up. This situation of liquidity surplus will force banks not to increase interest rates. Because of this surplus liquidity, banks have cut deposits rates. But they are not cutting the lending rates due to slow credit offtake, despite the speculation that RBI can increase key rates (repo or reverse repo) to contain inflation.
In the eight months of the current financial year till December 4, while the deposits with the commercial banks rose by 3,69,535 crore, credit offtake was only Rs 1,44,151 crore. This forced the banks to park around Rs 100,000 crore with the RBI at reverse repo rate of 3.25%.
When the interest rate condition was benign, SBI had cut its lending rates, particularly home loan rate. Bhatt claimed that the 8% interest rate on home loan announced by SBI had helped reviving real estate market. The buyers have started coming back and cement and steel sectors have also started improving, he said. In fact, SBI's decision to cut the rates forced other banks to follow suit, he added.
Bhatt does not think Indian economy had been affected by global recession. "The recession did not hit India the way it had affected European countries last year. There was only a slowdown in the growth rate which came down to 7% from 9%," he said.
Replying to a question on withdrawal of stimulus package by the government in the prevailing situation, Bhatt said it should not be taken back but 'phased out' in staggered manner.
Referring to the ongoing merger process of SBI associate banks, Bhatt said SBI is a major stakeholder in SBI associate banks like State Bank of Saurashtra and State Bank of Indore. "In fact, we did not have less than 75% stake in any of these banks and owned 100% in State Bank of Hyderabad and State Bank of Patiala which were with us for the last 50 to 60 years," he said.
State Bank of Saurashtra has merged while process was on in regard to State Bank of Indore, Bhatt said. The merger would improve SBI in terms of efficiency in operation, release of capital.
Subscribe to:
Posts (Atom)