IDBI Bank plans to tap LIC for equity via QIP in Q4

Restructures loans worth over Rs 2,700 crore in Q3

IDBI Bank plans to raise equity capital by issuing shares to institutional investors including Life Insurance Corporation of India through Qualified Institutional Placement (QIP) in the fourth quarter.

The government has already announced plans to infuse equity capital of Rs 555 crore in IDBI Bank through preferential placement of shares. It holds 70.52% stake (December 2012). The board of bank last week also cleared proposal to raise equity capital from institutional investors upto Rs 2,500 crore including premium amount.

B K Batra, deputy managing director, said, “We are on the edge (a floor of tier I capital at 8% preferred by the government) and want to have cushion to manage business growth. We plan to approach LIC and other institutions in current quarter subject to regulatory norms”.

Its capital Adequacy Ratio stood at 14.19% (Tier I was 8.01%) up at end of December 2012 up from 13.53% (Tier I - 7.54%) a year ago. Its stock closed lower by one% to Rs 112.2 on the Bombay Stock Exchange.

Last year (in 2011-12) LIC had picked up 5% stake in Mumbai-based public sector lender through preferential allotment as a part of capital expansion plans. LIC holds 9.16% stake (direct stake-7.57% and 1.59% through market plus growth fund).

Meanwhile in the third quarter bank restructured loans worth over Rs 2,700 crore, mostly of large and mid size corporate accounts. “It is sign of times”, said P Sitaram, its chief financial officer. He, however, did not disclose the names of accounts.

The provisions for restructured loans rose to Rs 160 crore in Q3 from Rs 134 crore a year ago.

The scale of debt recast in reporting quarter was higher compared to Rs 1,500-2,000 crore done in each of previous quarter. The outstanding restructured book was Rs 15,825 crore at the end of December 2012, up from Rs 9,894 crore at end of December 2011.

 

Bulging book of restrucured assets	Q3Fy12	Q4FY12	Q1FY13	Q2FY13	Q3FY13
Gross restructuredloans	9,894 cr	10,644 cr	11,366 cr	13,073 cr	15,825 cr

            
Source: IDBI Bank website