Syndicate Bank to raise ₹4,500-crore capital this fiscal

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Melwyn Rego
Melwyn Rego. Looking to strengthen capital position via equity and Basel-III compliant bonds: MD

Syndicate Bank is planning to raise ₹4,500 crore this financial year (2017-18) to bolster its share capital base.

“The bank this fiscal is planning to raise ₹2,500 crore under common equity (CET-1), ₹1,000 crore under AT-1, and ₹1,000 crore Basel-III compliant bonds,” said Melwyn Rego, Managing Director and CEO, Syndicate Bank.

“Each raising will be determined by the market. ₹500 crore of Basel-III compliant tier-II bonds was raised on May 3 to strengthen the capital position of the bank,” he added.

“In July, the bank raised AT-I bonds of ₹450 crore. Now we are evaluating various options to strengthen the capital position through equity and Basel-III compliant bonds,” he added.

The Capital Adequacy Ratio (CRAR) (Basel III) improved to 12.30 per cent as on June 30, 2017, from 11 per cent a year ago. Talking about net worth, Rego said: “The net worth of the bank as on June 30, 2017, was ₹11,856 crore in comparison to ₹11,488 crore last year (June 30, 2016).”

To bring down interest cost, the bank has launched a CASA (current and savings account) deposit campaign with the theme ‘Customised for business, personalised for individuals’.

“During the August 1 to September 30 campaign, we will be targeting corporates. This is mainly to increase opening of salary accounts. HNIs too will be targeted, and we will also focus on new account acquisition,” he added.

In addition to CASA deposits, the bank is also aggressively pushing for housing loan disbursements. Post demonetisation, the bank has strengthened its digital banking. “As part of providing enhanced customer service, we have implemented ‘Green PIN Project’ which allows our customers to generate new/reset existing debit card PIN through ATM any time.”

The bank has also launched “UPI application for the iOS platform of mobile phones”.

Customers can use Synd UPI on iPhones to send and receive money. Synd UPI is already available for mobile phones that run on android platform.

Source: http://www.thehindubusinessline.com/money-and-banking/syndicate-bank-to-raise-4500crore-capital-this-fiscal/article9805958.ece

FinMin revises criteria for recapitalisation of PSBs

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State-owned banks looking forward to the next round of capital infusion will need to fulfill a new set of criteria, including credit recovery, as the finance ministry has revised the recapitalisation norms.

The second tranche of capital allocation for the current fiscal would be based on cost of operations as well as recovery and quality of credit on the basis of risk weighted assets, sources said.

Only those lenders that fulfil the criteria post third quarter (October-December) results of the current fiscal will be eligible for the second round of funding, sources added.

The money was allocated last fiscal on the twin principles of ensuring 7.5 per cent common equity tier 1 (CET 1) at the end of the 2016 and growth capital to five major banks.

The government in July had announced the first round of capital infusion of Rs 22,915 crore for 13 banks.

“75 per cent of the amount (Rs 22,915 crore)…Is being released now to provide liquidity support for lending operations as also to enable banks to raise funds from the market,” the finance ministry had said in a statement.

“The remaining amount, to be released later, will be linked to performance with particular reference to greater efficiency, growth of both credit and deposits and reduction in the cost of operations,” it had said.

The first tranche was announced with the objective to enhance their lending operations and enable them to raise more money from the market.

Out of the Rs 22,915 crore, State Bank of India (SBI) was provided Rs 7,575 crore followed by Indian Overseas Bank (Rs 3,101 crore) and Punjab National Bank (Rs 2,816 crore).

The other lenders, which have got commitment of capital infusion are Bank of India (Rs 1,784 crore), Central Bank of India (Rs 1,729 crore), Syndicate Bank (Rs 1,034 crore), UCO Bank (Rs 1,033 crore), Canara Bank (Rs 997 crore), United Bank of India (Rs 810 crore), Union Bank of India (Rs 721 crore), Corporation Bank (Rs 677 crore), Dena Bank (Rs 594 crore) and Allahabad Bank (Rs 44 crore).

The capital infusion exercise for the current fiscal is based on an assessment of need as per the compounded annual growth rate (CAGR) of credit growth for the last five years, banks’ own projections of credit growth and estimates of the potential for growth of each PSB, it had said.

Finance minister Arun Jaitley in his budget speech for 2016-17 had proposed to allocate Rs 25,000 crore towards recapitalisation of PSU banks. “If additional capital is required by these banks, we will find the resources for doing so. We stand solidly behind these Banks,” he had said.

 

Source: http://www.mydigitalfc.com/economy/finmin-revises-criteria-recapitalisation-psbs-539