Leading financial sector entities including Deutsche Bank, JM Financial, Kotak Mahindra and Arcil have evinced interest in buying Dena Bank’s non-performing assets (NPAs) worth Rs 188.4 crore.
This is the second such large exercise by the Mumbai-based public sector bank to offload bad loans to clean up its balance sheet and reduce gross NPAs below 2.5 per cent of its total assets by March 2008.
The data room for investors was opened for prospective buyers in February and seven parties undertook due diligence, a senior Dena Bank official said. Though proposals have not been submitted so far, the bank hopes to complete the exercise before the close of this financial year.
The loans consist of 49 borrowers (both operating and closed units) with an aggregate principal balance of Rs 188.40 crore. These loans will be sold in either one or multiple tranches. The auction will help get better value of these assets than just selling them through bilateral negotiations.
BAD LOANS SHRINK
Rs crore
Gross NPAs
Net NPAs
2000-01
1928.26
1280.31
2001-02
1996.02
1227.25
2002-03
1616.58
997.28
2003-04
1484.01
884.35
2004-05
1147.54
591.00
2005-06
949.40
432.85
2006-07
744.48
364.80
In 2006-07, the bank had completed financial and legal due diligence on all the 64 accounts and sold 30 NPA accounts with an outstanding balance of Rs 391.85 crore to Asset Reconstruction Co for a cash consideration of Rs 83 crore.
Dena Bank’s gross NPAs declined to Rs 657.01 crore (3.09 per cent) at end of December 2007 from Rs 857.83 crore (4.99 per cent) a year ago. The bank’s net NPAs came down to Rs 293.76 crore (1.41 per cent) at end December 2007 from Rs 414.39 crore (2.47 per cent) a year ago. It wants to lower the net NPA ratio below 1 per cent by end of this financial year.
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