Barclays, which is looking at restructuring its India operations, may hold on to short-term retail loans, as it is not getting the “right price”. The British lender was now considering retaining retail loans maturing in 12-18 months on its books. It is likely to recover the money on its own, instead of selling the loans at hefty discounts, sources told Business Standard.
“Negotiations are still on. But it makes sense to recover the loans that are maturing in the near term. All options are being considered,” said a source.
After it sold its credit card portfolio in India to Standard Chartered Bank and Kotak Mahindra Bank in December 2011, Barclays had put its retail assets in the country on the block. At that time, the assets were valued at about Rs 3,200 crore and included residential mortgages, personal loans and advances to small business units. The move was part of Barclays’ decision to exit its retail banking operations in India to focus on more profitable business ventures such as wealth management and investment banking.
However, despite seven banks and financial services firms expressing their interest to buy these assets, Barclays is yet to finalise a deal. “In this uncertain environment, no one is willing to bid aggressively. Hence, a part of the portfolio may not be sold. No final decision has been taken,” said another source.
In an e-mailed response, the official spokesperson of Barclays in India stated, “We cannot comment on this.”
According to the data available with Business Standard, as on March 31, Barclays’ retail loan portfolio stood at Rs 1,617 crore, while residential mortgages, typically long-duration loans, were estimated at about Rs 737 crore. About 88 per cent of the bank’s total advances of Rs 8,657 crore were due for maturity in three years, data showed. For retail loans, the maturity break-up was not immediately available.
Bankers said there was concern over the credit quality, especially on the health of the unsecured retail loans, and acquiring the portfolio at a discount would be preferred.
For 2011-12, Barclays’ net non-performing asset ratio stood at 1.45 per cent. However, the percentage of non-performing assets was much higher in the unsecured loan portfolio. For personal loans, the gross non-performing asset ratio was 27 per cent.
