Bank of India sells over half of earmarked non-core assets

By: | Published: August 18, 2016 6:06 AM

Public sector lender Bank of India (BoI) has completed monetising ‘more than half’ of its non-core assets earmarked for sale in FY17, MD & CEO Melwyn Rego said on Wednesday.

Public sector lender Bank of India (BoI) has completed monetising ‘more than half’ of its non-core assets earmarked for sale in FY17, MD & CEO Melwyn Rego said on Wednesday.

Speaking to reporters on the sidelines of Ficci banking conclave here, Rego said, “That’s an option we are looking at and we are also long at divestment of our investments in associates and monetisation of non-core assets. The total quantum is Rs 1,000 crore of which we have monetised more than half of it.”

In June, the bank sold 18% stake in its life insurance joint venture Star Union Dai-Ichi to Dai-Ichi for around Rs 540 crore thereby diluting its stake to 30%.

On capital raising plans, Rego said that the bank is looking at a variety of instruments to raise funds in FY17. “We have already raised Rs 1,500 crore by way of AT 1 and similar amount by way of tier 2 capital,” he said, adding that BoI is quite comfortable on the capital front.

He said that there were some uncertainties regarding the bank’s capital position in the last quarter of FY16. “When I spoke about the last quarter of the previous year it was more because of the uncertainly with regard to how it would pan out at the end of the year because as you know we are a bank that has international presence,” Rego said.

He had earlier told FE the bank sold Inter Bank Participation Certificates (IBPCs) of close to Rs 8,000 crore to shore up capital leading to the shrinkage of balance sheet by 1.4% to Rs 6.09 lakh crore in FY16.

“Overnight, the inter bank lines would stop, the letters of credit (LCs) and the bank guarantees will no longer be accepted, the refinancing of our bonds under the MTN programme would not be possible,” he explained. As per RBI guidelines, a bank must maintain a total capital adequacy ratio of at least 9% of its risk-weighted assets, including a 7% Tier I capital ratio.

IBPC transactions are aimed to fill short-term requirements of banks and are typically bought back by the seller bank within three to four months, depending on the agreement. The bank’s CAR under Basel III stood at 12.10% as of June 2016 .

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