Markets

Finance ministry to PSBs: Don’t rush in together to launch IPOs

NEW DELHI: Finance ministry has directed state-run lenders to coordinate the schedules of their planned share sales so that they all don’t approach the market together. Eight public sector banks are looking to sell shares in the next three months. Discussions have been held with banks about the timing of their public offers, a senior finance ministry official said.

“We have already given approvals for banks to raise money through their public offerings. It, however, should not be the case that they all hit the markets around the same time. The market has a limited appetite and banks should get the best out of it,” the official said. The lenders gearing up for public offers include Punjab National Bank, Bank of Baroda, Bank of India, Union Bank of India, Andhra Bank and Allahabad Bank.

“Most of this will be done through the qualified institutional placement route. Some banks may come out with a follow-on public offer,” the official said, adding that the recent sovereign rating upgrade by Moody’s Investors Service will help attract foreign investors. The government in October announced a Rs 2.1lakh crore capital infusion for state-run banks to be funded through bonds, budget support and direct capital raising by lenders. It is likely to issue Rs 1.35 lakh crore of bank recapitalisation bonds, taking the entire liability of repayment and interest in the central budget. Banks have been directed to also look at discarding noncore assets.

“Banks are also looking at their unproductive branches, both domestic and foreign, and are closing them down, wherever required,” said a senior bank executive with a north-based lender.

Original Article

Leave a Reply