Source:14 SEP, 2010, 04.04PM IST,REUTERS :IANJIN:
China Mobile Ltd will still work with Vodafone Group Plc on developing a common 4G mobile telecommunications standard, its chairman said on Monday, even after the British company sold its $6.5 billion stake in the Chinese operator.
Vodafone's sale of its 3.2 per cent holding in the world's biggest mobile carrier also removed the uncertainty that had surrounded its share price, China Mobile Chairman Wang Jianzhou told reporters on the sidelines of the World Economic Forum.
"We've worked with Vodafone for ten years, and this will continue," Wang said. "Areas we intend to work together on include developing new markets together, technology, and green development."
The sale of its China Mobile shares was part of Vodafone's new strategy to exit non-strategic minority investments, which analysts believe have weighed on Vodafone's overall value in recent years.
Tuesday, September 14, 2010
20,000 not a big deal for Sensex: Analysts
Source :MUMBAI:14 SEP, 2010, 03.11PM IST,PTI, & ET
With the BSE benchmark Sensex breaching the 19,000-level and still going strong, analysts believe that Indian markets have entered a bull phase and persistent FII inflows may push the index past the 20,000-mark in the coming days.
"Investors are sitting on huge cash piles and as the market is rising, they cannot sit sideways for long. A large chunk of cash is coming in the market and in such a scenario, hitting the 20,000-mark seems easy," CNI Research CMD Kishore Ostwal said.
"By October the Sensex is likely to cross the 20,000-mark and by November, I see it at the 21,000-level," Ostwal added.
The Sensex had touched an all-time high level of 21,206 in January, 2008, a year that saw the benchmark index of the Bombay Stock Exchange record an over 80 per cent jump.
Echoing a similar opinion, Network Stock Brokings Head of Institutional Sales & Strategy Prakash Diwan said hitting the 20,000-level would not be a big deal in the coming days.
"The market is driven by strong liquidity and FII inflows are expected to continue in the local stock market. Hitting the 20,000-level by Sensex would not be a big deal. Soon the Sensex will be able to reach that level," he said.
Yesterday, the Sensex zoomed by more than 408 points to cross the 19,000-level for the first time in 32 months.
"Investors have faith in the India growth story and in the coming days, the Sensex will touch new highs," Diwan added.
The index has risen 122.3 per cent so far this year, from a low of 8,701.07 in October, 2008, on account of the global economic crisis.
"I do not see any reason why markets should not move up. It is a liquidity-supported rally and unabated FII inflows would further push local markets," SMC Global Securities Equity Head Jagannadham Thunuguntla said.
"India is one of the hot spots for overseas investors and those fund houses, which were still watching the situation, now are interested to pick up local stocks as global equities are rebounding," Thunuguntla added.
The Sensex took just five days to reach the 19,000-level from the 18,221.43 mark. On September 3, the index had settled at 18,221.43.
Three banking stocks -- SBI, ICICI Bank and HDFC -- accounted for about 70 per cent of the Sensex's rise from 18,000 to 19,000.
"Banks are on a rising streak on optimism that lending will pick up in a fast-growing Indian economy and that they are well capitalised," IIFL Vice-President (Research) Amar Ambani said.
"Banking stocks jumped as regulators gave firms more time than expected to meet capital requirements (the Basel norms)," another analyst added.
However, equity analysts did not rule out a correction in the markets, as they felt stocks are overvalued.
"Investors should take cautious approach about the market this time. A fall from this high cannot be ruled out," Unicon Financial CEO Gajendra Nagpal said.
The BSE benchmark Sensex was up by 153.39 points at 19,361.72 today, with just an hour left before the close of trade.
OBC Upper Tier II Bonds issue opens on Sept 16
Source :B L :MUMBAI:Sep 14,2010
Oriental Bank of Commerce announced BSE on Tuesday that the Rs 200-crore Upper Tier II Bonds issue on private placement basis is slated to open on September 16 and will close on September 17, and the deemed date of allotment shall be September 20 .
The coupon rate shall be 8.68 per cent for the first 10 years and shall be stepped MUMBAI:up to 9.18 per cent for subsequent five years, if call option is not exercised by the bank at the end of 10th year from the deemed date of allotment.
Banks looking to expand overseas
Source :Priya Nair:Mumbai, Sept. 13,2010
Indian banks are increasingly looking to expand overseas in order to balance their portfolios and spread out their risks. Also, the expansion and globalisation of the Indian corporate sector will bring business and volumes to Indian banks, said Mr Deepak Haria, Partner, Deloitte.
In order to assist the Indian financial sector on setting up regulated business within the UK, Deloitte and UK Trade and Investment (UKTI) recently released a guide for India Inc.
Lord James Sassoon, Commercial Secretary to the Treasury, UK, said during a recent banking seminar, that at least 10 Indian banks and financial sector players are considering expanding into the UK.
State Bank of India is looking to increase the number of its branches in the UK to 12 from seven, over the next five months, Mr O. P. Bhatt, Chairman, SBI, said recently.
According to Mr Haria, following the financial crisis, when a lot of banks in the UK were downsized or withdrawn, Indian banks are seen as good and stable banks, particularly the public sector banks.
Apart from the UK and other traditional geographies such as China, Hong Kong, West Asia, a number of Indian banks are also looking to go into Africa, Canada, Brazil, Australia and New Zealand.
Also, in the last few years, the Indian economy has been growing and Indian banks want to follow their customers who are globalising. “Just as India Inc is globalising, the need for banking abroad is increasing and what better than their natural Indian banking partner being present where they go next,'' he said.
Focusing on the huge non-resident Indian community is also helping Indian banks to expand their business.
RBI mid-quarter review on Thursday
Source : B L :Mumbai:Sep 14,2010
The Reserve Bank of India will release its Mid-Quarter Review of Monetary Policy 2010-11 on Thursday. Opinion is divided on the steps the RBI is likely to take..
On the one hand, bankers and economists feel that the RBI may not hike short-term interest rates so as not to dampen credit growth; on the other, rising inflationary pressures could force its hand.
Corporation Bank has launched ‘e-Kanike' e-donation
Mr Ramnath Pradeep
Source : Business Line Bureau:Mangalore, Sept. 13,2010
Corporation Bank has launched ‘e-Kanike' (e-donation) service through its e-payment gateway.
A bank release said here on Monday that Dr D. Veerendra Heggade, Dharmadhikari of Shri Kshethra Dharmasthala, inaugurated the service at Dharmasthala in Dakshina Kannada district on Monday in the presence of Mr Ramnath Pradeep, Chairman and Managing Director of the bank.
Launching the facility, Mr Pradeep said: “The e-Kanike offerings can be made through debit/credit cards (both Visa and Master) of any bank by the devotees. This service is available 24X7 to the devotees and the services are free of charge.”
Presiding over the launching ceremony, Dr Heggade said Dakshina Kannada and Udupi districts have immensely contributed to the banking system in the country, right from inculcating banking habits to technology implementation and now financial inclusion. The special efforts of Corporation Bank needs specific mention having been ahead in technology implementation for the benefit of customers, he said.
The unique feature of this service is that it will benefit a large section of devotees of the kshetra in fulfilling their vows, whichever bank they maintain the account, Dr Heggade said.
Web site
With this service, devotees of Shree Kshethra Dharmasthala Manjunatheshwara Temple can click in and offer ‘kanike' or book for different ‘sevas' at the temple.
The intending devotees can access www.shridharmasthala.org for offering the e-kanike or for booking for different sevas.
They need to fill in the details such as name, address, mobile number etc, with seva/kanike details.
For payment, they can select payment option either through debit or credit card issued by any bank or through Corporation Bank's net banking facility.
Once the online payment transaction is complete, they will get an e-receipt with unique reference number as acknowledgement.
They will also get an SMS if their mobile number is registered, the release said.
Allahabad Bank pays Rs 136-cr dividend to Govt
Source : B L Bureau:Kolkata, September 13,2010
Allahabad Bank paid about Rs 136 crore as dividend for the financial year 2009-10 to the Union Government. The Union Government holds 55.23 per cent stake in the bank at present. The bank had declared a dividend of Rs 5.50 /share
The dividend cheque was handed over to the Union Finance Minister, Mr Pranab Mukherjee, by the bank's Chairman and Managing Director, Mr J.P. Dua, along with the Executive Directors, Mr D. Sarkar and Mr M.R. Nayak on Monday, according to a press statement issued by the bank.
Allahabad Bank's total business grew by about 22 per cent during the first quarter of fiscal 2010-11 at Rs 1,84,039 crore. Deposits grew by 21 per cent while advances by 24 per cent, Mr Dua said.
Shriram, TPG Capital to buy Vishal Retail for Rs 100 cr
Source: BusinesslineBureau:New Delhi, Sept. 13
Debt-laden Vishal Retail has said its board has approved the sale of its retail trading business to Chennai-based Shriram Group and the wholesale business, institutional sales and franchise operation to private equity company TPG Capital.
The combined deal is estimated at Rs 100 crore.
The Delhi-based retailer operates chains such as Vishal, Vishal Retail, Vishal Megamart and Vishal Fashion Mart. It said its board has decided to conduct a postal ballot to seek shareholders' approval for the deal.
The Chairman and Managing Director of Vishal Retail, Mr Ram Chandra Agrawal, and its Company Secretary, Mr Arun Gupta, have been authorised to conduct the ballot. The results will be announced on October 25.
In a notice to the Bombay Stock Exchange, the company said that the asset sale does not include its freehold properties in Hubli, Kolkata, Dehradun and Jabalpur.
Slowdown-hit
Vishal Retail was hit by the downturn in the economy last year and ran up a debt of Rs 730 crore. In 2008-09, it had borrowed money to scale up its operations.
The asset sale proceeds will only partly meet the Rs 730-crore debt that the company has with lenders such as SBI, HDFC Bank, HSBC and ING Vysya Bank that are also part of the corporate debt restructuring process. The lenders had recently approved a revised offer from TPG to take over the assets of the firm.
Shriram is a diversified group, with focus on areas such as financial services, property and engineering services.
In June, Vishal had announced that it had signed a memorandum of understanding with private equity firm TPG. TPG has brought on board its other portfolio group, Shriram, that has among its businesses a retail finance firm, as foreign investors are not allowed to invest directly in multi-brand retail companies.
Earlier, the Kishore Biyani-led Future Group was also said to be in talks with Vishal for a possible buyout.
For the quarter ended June 30, Vishal posted a net loss of Rs 19.47 crore and net sales of Rs 334.63 crore.
It also noted that the sale will be subject to further orders of the Delhi High Court, which has restrained the retailer from selling its assets after a case was filed by some of Vishal's lenders, who were not part of the debt recast exercise.
bindu.menon@thehindu.co.in
Banking beyond Basel
| Source : Business Standard / New Delhi September 14, 2010, 0:40 IST |
The Reserve Bank of India (RBI) has every reason to pat itself on the back as far as its policy on prudential and capital adequacy norms for banks is concerned.
The new Basel- III norms, agreed upon by central bankers from the major economies of the world and to be considered by heads of government at the next Group of 20 summit, will only be catching up with already existing norms in India as far as capital adequacy goes.
While Basel III requirement is that Tier 1 (equity capital and disclosed reserves) capital ratio be 6 per cent, in India it is already well above this.
As RBI governor Duvvuri Subbarao said last week, as on June 30 the capital adequacy ratio of the banking system stood at 13.4 per cent, of which Tier-I capital accounted for 9.3 per cent. The new Basel-III norms introduce a new concept called capital conservation buffer (CCB). This will be an additional 2.5 per cent on top of the new Tier-1 capital. Any bank whose capital ratio fails to stay above the buffer faces restrictions by supervisors on payouts such as dividends, share buybacks and bonuses.
The new CCB will include equity, after deductions like deferred taxes. This new buffer is proposed to be phased in from January 2016 and will be fully effective in January 2019. In addition, it has also been proposed that there would be a counter-cyclical capital buffer, amounting to between 0 and 2.5 per cent of equity or other full loss-absorbing capital. It is aimed at forcing banks to build up an extra buffer when banks see excessive credit in the system that may pose a threat to bank bottom lines.
Banks would then be able to tap this buffer to offset any potential losses without having to raise fresh capital immediately.
No timeline has been yet fixed for this new concept to be introduced.
Other ideas proposed include new definitions of capital aimed at improving both the quantity and quality of bank capital. It is reiterated that the predominant form of Tier-1 capital must be equity and retained earnings. To this, banks can include deferred tax assets, mortgage-servicing rights and investments in financial institutions to an amount no more than 15 per cent of the common equity component.
The new norms also impose a ceiling on build-up of leverage in the banking sector. It is hoped that this would reduce the risk of destabilisation from deleveraging. There are also new liquidity norms aimed at ensuring that banks have enough liquid assets to tide over short-term shocks and medium to longer-term pressures.
These and other proposals pertaining to risk are aimed at ensuring that the banking sector is better protected from the macroeconomic and financial consequences of excess credit and leverage.
It is surprising, however, that the timetable laid out for adherence to Basel III is far too stretched out.
There is good reason to insist on a shorter time span and early implementation of these norms.
One reason why banking stocks have done so well on Monday could be that western banks feel less intimidated by this liberal timetable.
| India must continue to remain a step ahead...... |
Vangal, FIs to sell TMB holdings
SOURCE : B S R reporter:Mumbai, Sep 14,2010
Ramesh Vangal and foreign investors backing him have decided to exit the Nadar community-controlled Tamilnad Mercantile Bank (TMB). The buyers include Kuwait and Brunei sovereign wealth funds, foreign insurers and banks through different special purpose vehicles (SPVs). “The proposal has been approved by the bank's board and has been sent for approval to Reserve Bank of India (RBI),” according to a TMB source.
Former Pepsico head Vangal and institutions backing him diluted around 13.09 per cent in the bank over the last three to four months, said the highly-placed source in TMB. This was confirmed by another senior official in the bank, who did not wish to be named.
“We have a photocopy of the share certificate and proof of fund transfers between Standard Chartered Holdings and Vangal, based on which we have sent a recommendation to RBI,” said the source. An SPV was floated by Standard Chartered Holdings for the share sale.
Vangal, when contacted, denied any such sale and said: "I am a long-term player and investor in the bank.’’ Representatives of TMB said Vangal had furnished a letter to the bank stating that he did not sell the shares.
Vangals’s Katra Holdings, which owns 3.64 per cent, and close friend Ravi S Trehan's RST Ltd, which holds 1 per cent, have transferred their stakes to Subcontinental Equities Ltd, belonging to Standard Chartered Holdings, London. Bangalore-based Vector Program, an investment vehicle backed by Vangal, transferred its 4.73 per cent holdings to Star Ship Equity Holdings, created by AXA Group (Western and Southern). Gokul Patnaik sold 3.72 per cent stake to East River Holdings, floated by sovereign wealth funds Kuwait Investment Authority and Brunei Investment Agency.
The value of the transactions could not be ascertained.
In May 2007, a consortium of six foreign and two Indian investors led by Vangal had picked up 24.92 per cent stake in TMB.
Foreign institutional investors in the bank included Kamehameha Mauritius (0.71 per cent), Cuna Group Mauritius (0.71 per cent), FI Investments Mauritius (1.90 per cent) and Swiss Re Investors (3.56 per cent). The shareholding of these investors remains unchanged.
Indian banks may not need more capital for Basel-III
Source : B S Reporter: Mumbai,sep.14,2010
Most Indian banks are sufficiently capitalised and unlikely to need additional capital in the near term to meet the Basel-III norms approved by the Basel Committee on Banking Supervision (BCBS) on Sunday. But emphasis on core capital and a conservation buffer could put pressure on banks’ return on equity, said some analysts.
BCBS recommended that Tier-I capital, which includes common equity and other financial instruments, will have to be increased to six per cent from four per cent. It suggested raising the minimum common equity capital requirement from two per cent to 4.5 per cent by January 1, 2015.
As on June 30, 2010, the aggregate capital to risk weighted assets ratio of the Indian banking system stood at 13.4 per cent, of which Tier-I capital was 9.3 per cent, according to the Reserve Bank of India (RBI) data.
This is well above the six per cent Tier-I capital ratio mandated in the Basel-III norms. However, the standards mandate a minimum common equity of seven per cent, including a capital conservation buffer of 2.5 per cent.
This may be a challenge, especially for public sector banks, which rely more on perpetual debt instruments to shore up their Tier-I capital, say analysts.
The conservation buffer is intended to achieve, what BCBS says, “The broader macro-prudential goal of protecting the banking sector from periods of excess aggregate credit growth.”
“There is no significant impact on Indian banks at this point in time. Current capitalization of top banks in India won’t require them to increase core capital significantly,’’ said Vibha Batra, co-head for Financial Sector Ratings at ICRA Ltd. “Although some public sector banks —which have the government support in the form of preferential shares for non-core Tier-1 capital — may need to strengthen their core capital.’’
“At present, public sector banks have a larger component of perpetual debt (and hence higher leverage) and lower Tier-1 ratios in general compared to private sector banks. Hence, a quicker transition to Basel-III will impose relatively greater capital requirements on them if they have to maintain current levels of growth,” according to a note from Macquarie Equities Research.
Bank of India and Union Bank of India have the lowest core Tier-1 ratios (less than 7.5 per cent).
The core Tier-1 ratio of private sector banks is 13 per cent-plus on an average. The new norms will be implemented between January 1, 2013, and January 1, 2015. The Bankex was up 3.62 per cent to close at 1,3454.56 points. One of the biggest gainers was the country’s largest lender, State Bank of India, which rose 5.5 per cent to '3,147.25, a record high. ICICI Bank rose 4.4 per cent to '1,097.30.
Return on Equity
Analysts say the proposed norms may pose a challenge to growth and sustainable return on equity over the longer term as leverage reduces. “A higher core Tier-1 ratio, coupled with a conservation buffer of 250 basis points, could impact growth. It could result in lower leverage, implying lower sustainable return on equity” Macquarie group said in a research note.
“The new common equity norms will place premium on efficient use of capital,’’ said Monish Shah, senior director with Deloitte Consulting. “It will make banks risk sensitive and realign exposure for better use of capital.’’
“Most Indian banks have a minimum core Tier-I ratio of seven per cent, so banks are comfortable on that count,” said a senior executive of the country’s third largest lender, Axis Bank. “What we are more concerned about is the liquidity standards.’’
The Basel-III norms involve two regulatory standards for managing liquidity risk — a liquidity coverage ratio to ensure resilience over the short term and a net stable funding ratio to promote resilience over the longer term. “
The major challenge for Indian banks lies in implementing the liquidity standards as they have limited capability to collect the relevant data accurately and granularly, and to formulate and predict the liquidity stress scenarios,” RBI Governor D Subbarao had said in a speech in Mumbai last week before the Basel-III norms were finalised.
Suzlon plans R&D centre, listing in China
|
The move is to take advantage of the local market and increase localisation to compete with Chinese rivals, news reports from China said today, quoting Suzlon’s chairman and managing director, Tulsi Tanti. He was talking to reporters on the sidelines of the World Economic Forum meeting in Tianjin, China.
There are medium-term plans to list the Chinese subsidiary, but Tulsi Tanti did not specify any time frame. Suzlon is the world’s largest wind energy turbine maker and is listed on the Bombay Stock Exchange.
It is yet to finalise location and size of investment for the R&D Centre, said the reports. A few weeks earlier, it had opened a new R&D centre in Germany. It also has one at its Pune headquarters.
Present in China since 2006, it is the eighth largest wind energy company there. China added 13.7 Gigawatts (a Gw is 1,000 Megawatts) last year and with an installed capacity of 25.85 Gw of wind energy, is one of the fastest growing markets in the world. The annual growth rate is 115 per cent, said Suzlon executives.
They declined to reveal the size of annual revenues from China. Suzlon has a manufacturing unit in Tianjin and a marketing office in Beijing.
It employs about 800 people in that country. Its subsidiary, REpower, in which Suzlon holds over 90 per cent stake, has an assembling unit in China and employs 100 people in that country. Suzlon’s installed capacity in the country is 530 Mw, said a company spokesperson.
He said REpower, a specialist in making offshore turbines, was exploring a joint venture to make these in China with a local partner.
IMF head says Basel falls short on bank supervision
| Source :Reuters / Milan September 14, 2010, 12:25 IST |
The proposed Basel III bank capital rules go in the right direction but need
to be completed by a strengthening of banking supervision,
the head of the International Monetary Fund said on Tuesday.
"There was an absolute need to remodel the rules of the financial sector...
this, at the moment, is much more important than potential negative
effects on growth that could come from the increase in regulation,"
Dominique Stauss-Kahn said in an interview in Italy's Il Sole 24 Ore.
But the IMF head said supervision is more important.
"My worry is we have made progress on the rules front...
but there is still a lot to do on the other questions".
Strauss-Kahn also said the economic crisis will not end
until unemployment has been reduced substantially.
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