Allahabad Bank expects to raise about Rs 500 crore from the sale of its non-core assets. These assets include the bank’s 28.52 per cent stake in Universal Sompo General Insurance, and about 12 properties across India. The bank has recently come out of the Prompt Corrective Action (PCA) framework.
According to S S Mallikarjuna Rao, managing director & chief executive officer (CEO) of Allahabad Bank, the lender expects to raise about Rs 200 crore from the sale of its property at Pedder Road in Mumbai.
The bank had recently invited bids for the property, but did not receive any as the reserve price was on a higher side at around Rs 220 crore. It will again invite bids, said Rao. It expects to raise about Rs 250-300 crore through the sale of its properties.
Allahabad Bank, along with Indian Overseas Bank, has appointed Choice Consultant to assess the valuation of the company. Based on it, the bank will decide on the extent of stake dilution, added Rao.
Apart from Allahabad Bank, Indian Overseas Bank holds 18.06 per cent stake in the insurance venture. Overseas partner Sompo Japan Nipponkoa Insurance is the largest shareholder, with 34.6 per cent stake, Karnataka Bank holds 6.02 per cent, and Dabur Investment Corporation holds 12.8 per cent.
Further, Rao said, the bank expects to return back to profitability by June 2019, and bring down the net non-performing assets (NPA) below 6 per cent.
Universal Sompo on Friday announced the launch of the online portal to be integrated with Allahabad Bank’s branch systems. It would empower the bank employees to issue the company’s co-branded health insurance product Allahabad Health Care Plus (ABHCP) on a real-time basis for their savings account customers.
Allahabad Bank had posted a net loss Rs 733 crore in the third quarter (Q3) against a net loss of Rs 1,264 crore in the year-ago period. In Q2FY19, the net loss stood at Rs 1,822 crore.
The net NPA percentage stood at 7.70 per cent in Q3FY19 against 8.97 per cent in the year-ago period.
Recently, the bank received a capitalisation of Rs 6,896 crore from the government. The lender needs to bring down the government shareholding from about 91 per cent to 75 per cent by October 2020, and will need to raise about Rs 4,000 crore to reduce the stake, said Rao.