3 state-run banks plan to sell Rs 2,700 crore NPAs to ARCs

3 state-run banks plan to sell Rs 2,700 crore NPAs to ARCs

After a lull in asset sales markets in the past few quarters wherein state-run banks failed to dispose of their troubled loans, more such banks are planning to tap the ARCs this quarter. City-based Union Bank of India  , Karnataka-based Corporation Bank  and Bank of Maharashtra  on Monday said they are planning to sell bad loans of Rs 2,700 crore to asset reconstruction companies (ARCs) in this quarter.

union Bank Chairman and MD Arun Tiwari said his bank is planning to "sell Rs 1,200 crore this quarter. In the first quarter, we had put on block Rs 900 crore, but could not get the right price. In te second quarter too, if only we get the right price we will go ahead". Similarly, Corporation Bank also said it is planning to sell some of its bad loans. "From the last two years, we were holding bad loans, but now we thought some of these assets can be sold to ARCs. We may look at selling around Rs 1,000 crore of bad loans in this quarter itself," Corporation Banks Chairman and MD S R Bansal told reporters here today.

The bank may also look at selling higher amount of non-performing loans to ARCs later in the year, Bansal said. In the quarter ended June 30, 2015, the bank's gross NPAs stood at 5.43 percent as against 3.96 percent in the same period last year. Similarly, Bank of Maharashtra chairman and MD Sushil Muhnot also said the bank is planning to offload Rs 500 crore of bad loans in the first week of September. Meanwhile, Corporation Bank also revised its base rate to 9.9 percent from 10 percent earlier with effect from today. Bansal said reduction in base rate will not affect its margins as bank has already reduced its cost of deposit rates.

 "This will not have any impact. In fact, we had done due diligence. We had Rs 9,000 crore of excess liquidity. We are concentrating on reducing bulk deposit," he said. He said since corporate credit is not picking up, the bank is focusing on MSME, retail and agriculture sectors, where there is growth. In this fiscal, the bank is targeting a credit and deposit growth of 12 percent. Union Bank stock price On August 25, 2015, Union Bank of India closed at Rs 175.95, up Rs 2.75, or 1.59 percent. The 52-week high of the share was Rs 253.50 and the 52-week low was Rs 129.80. The company's trailing 12-month (TTM) EPS was at Rs 25.74 per share as per the quarter ended June 2015. The stock's price-to-earnings (P/E) ratio was 6.84. The latest book value of the company is Rs 288.40 per share. At current value, the price-to-book value of the company is 0.61.

Source :http://www.moneycontrol.com/news/business/3-state-run-banks-plan-to-sell-rs-2700-crore-npas-to-arcs_2716421.html