Natwest Struggles To Sell Off Hdfc Bank Holding
NatWest Markets has been unable to find a buyer for its 20 per cent stake in HDFC Bank but it is learnt that negotiations are on with Chase Manhattan Bank and Government of Singapore Investment Corporation.
In a press note, Roderick Richards, NatWest group's chief representative in India, said, "We have no current proposal to dispose of our investment in HDFC Bank. Our priority is to ensure the continued steady development of the full range of banking activities of HDFC Bank, particularly in trade finance and treasury products where the strategic alliance between NatWest and HDFC Bank has shown greatest strengths."
Richards, however, added, "In response to approaches we have received from interest parties, we have sought to concentrate on how the proven benefits of such a strategic alliance might be maintained."
Speaking to Business Standard, Richards said, "maintaining the proven benefits of the alliance will be a principal criteria for sale."
The statement by NatWest follows a number of approaches over the past few months, following the reduction of NatWest's activities in Asia, from international financial institutions and investor groups expressing an interest in investing in HDFC Bank.
Sources point out that given the current status of Asia and the sanctions on India, NatWest is not able to get a good price.
It is also not in a hurry to get out of HDFC Bank. Market analysts see the statement by NatWest as a signal to the market that it is in no hurry to sell.
NatWest Markets had decided to sell its 20 per cent stake in HDFC Bank with which it has a strategic alliance as a part of its decision to pull out of equity investments in Asia after the South East Asian crisis.
Sometime back , Deepak Parekh, chairman, Housing Development Finance Corporation, had said, "NatWest Markets wants to sell its stake in HDFC Bank and they have conveyed this to us. Both NatWest Markets and HDFC are looking for a suitable candidate to pick up this stake."
NatWest Markets can now sell its stake as the lock-in period of five years expired in May. Sources point out that the sale of its stake in HDFC Bank will prove to be very profitable for NatWest Markets due to the significant market capitalisation.
However, the exchange rate will be against NatWest Markets as the rupee has depreciated substantially over the past five years to rule at over 42.50 to a dollar.In fact, HDFC itself can pick up at least part of the stake in case the issue comes to a crunch. Under the Reserve Bank guidelines, promoters can hold a stake of 40 per cent, and hence, HDFC, which has a 25 per cent stake, can pick up another 15 per cent.