Hdfc Bank Sees Rs 100cr Tier Ii Capital Infusion

Housing Develop-ment Finance Corpo-ration (HDFC), Life Insurance Corp-oration (LIC) and General Insurance Corporation (GIC) & subsidiaries have pumped in Rs 100 crore as tier two capital in HDFC Bank.

The rapid expansion of the asset base of HDFC Bank in the current financial year has prompted the fresh infusion of tier two capital.

The capital adequacy ratio (CAR), which was at 13.02 per cent in the beginning of the financial year, went down to around 11 per cent as the loan book grew.

Even though the CAR was more than the stipulated eight per cent, HDFC Bank took a prudent step of infusing fresh long-term debt capital which has taken the CAR to over 14 per cent. Another reason for debt capital was avoid an expansion of the equity base which would have diluted shareholder value.

 

Natwest Markets is planning to sell its 20 per cent stake in HDFC Bank and this stake might be picked up by HDFC or be sold to a new strategic alliance partner. There will be no global depository receipts issue to park the stake divested by Natwest Markets, it is pointed out. Meanwhile, HDFC, LIC and GIC & subsidiaries have already put in Rs 100 crore as tier two capital.

HDFC and LIC has pumped in Rs 40 crore each and the balance Rs 20 crore has been brought in by GIC and its subsidiaries. The long-term debt issue carries a coupon of 13 per cent and has a tenure of six-and-a-half years. The pumping of this money will enable HDFC Bank to expand its asset base by another Rs 1200 crore.

Long-term debt is, however, subjected to progressive discounting while calculating CAR as the bonds near maturity.

The discounting commences when the residual maturity is five years. The bond will be in the nature of subordinated debt.

...Scrip plunges

The HDFC Bank scrip came under selling pressure at both the exchanges yesterday on news that one of the strategic alliance partner is likely to pull out of the venture.

At the NSE, the scrip plummeted to Rs 62.20, a loss of nearly 8 per cent over its previous close of Rs 67.55. At the BSE, the scrip closed at Rs 63.05 from its previous close of Rs 67.35. It dropped to a low of Rs 62.10 during intra-day trading.

Till the situation becomes clearer on the alliance partner, the scrip will resist upward movement, said Nikesh Shah, head of research, N H Securities.

At the NSE, nearly 3.74 lakh shares worth Rs 24 lakh shares changed hands yesterday.