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Low investor appetite may dampen bank fundraising plan: Morgan

Eight public sector banks have taken board approvals to raise fresh capital, says a report

Press Trust of India 

Low investor appetite may dampen bank fundraising plan: Morgan

A number of state-owned have taken board approvals to raise significant amount of capital, but investor appetite for these fresh issuance is likely to be lukewarm, says a

According to a research report, eight public sector have taken board approvals to raise fresh capital, while another five have informed exchanges that their boards will consider capital raising in upcoming meetings.

State Bank of India (SBI), Bank of India, Oriental Bank of Commerce, Vijaya Bank, Bank of Maharashtra, Dena Bank, Indian Bank, and Bank have taken approval from the board to raise capital, while those that would seek approval are Bank of Baroda, United Bank of India, Allahabad Bank, Corporation Bank and Andhra Bank. The report, however, noted that the investor appetite for fresh issuance is likely to be lukewarm. It noted that while large should be able to raise capital given relatively better fundamentals, smaller state owned may struggle. “With all looking to raise capital, demand from investors may be muted — unless make this offering to government/government backed entities,” the said.

Moreover, the amounts they are looking to raise is high at as much as 90 per cent of market cap (compared to 6 per cent at the SBI). The said as government capitalisation continues to be piecemeal and below requirements, state-owned enterprise will likely struggle to make proper provisions on bad loans, keeping the non-performing loans problems alive.

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