Banks Shelve Ipo Plans

After making a beeline for announcing initial public offers, public sector banks are now going slow with plans and some like the Bank of Maharashtra have decided against a public listing for the moment.

Finance ministry officials told Business Standard that only three banks had approached the Centre for permission to reduce government holding. The list includes Union Bank of India, Central Bank and Canara Bank, which last week sought the finance ministry's permission for a Rs 400 crore IPO.

Officials added that a large number of directors on the Bank of Maharashtra board opposed the management's move for an IPO at its last meeting, saying the timing was not conducive for such a float as the markets were not doing well.

Other public sector banks like the United Bank of India have said they will consider an IPO only if the market conditions improve. Uco Bank, which was also planning a float, has decided that its IPO will hit the market towards the beginning of the next financial year.

The government has decided to write off Uco Bank's accumulated losses of around Rs 1,700 crore. Others like Allahabad Bank have also announced their decision to go public.

At present, 11 state-owned banks are listed, with Punjab National Bank the last one to come out with an IPO. In the listed public sector banks, the government holding ranges between 59 per cent, in case of the State Bank of India, to 80 per cent in case of Punjab National Bank, which listed on the stock exchanges earlier this year.

Banking sector observers said the public sector banks decided to announce their IPO intentions after the Punjab National Bank issue was well received by the market and it was widely expected that the stock market conditions would improve. However, with fears of a poor monsoon some banks are rethinking their strategy and may defer their IPO plans.