Tampered By Bad Loans IDBI Bank to Sell Non-Core Assets, to Recover Rs. 200 Cr

Selling off family silver will be a key strategy for IDBI Bank in the current financial year to insulate itself from the losses. The bank has put on block four floors of Mafatlal Centre in Nariman Point as part of its ongoing strategy to sell off non-core assets to provide for bad loans. It is expecting to fetch about Rs 200 crore from the sale of this property.

IDBI mutual fund and IDBI capital, which are housed in the building, will move back to the corporate office IDBI Tower at Cuffe Parade in Mumbai where the bank has about six floors vacant. The other big asset sale will be offloading of a 30% stake in National stock exchange from (NSE) from which the bank is expecting a windfall of Rs 800 crore.

But the articles of association of the NSE states that the sponsors should hold 51% stake. The sponsors including  IDBI Bank holds 61% stake in NSE. IDBI Bank owns 30% of this which it will offload once Securities and Exchange Board of India (Sebi) gives the nod to sell sponsor’s shareholding.

A senior bank official said, “Sebi is expected clear this sale after it gives some clarification on sponsors holding shares. Out of the 10%, we have already found bidders for 7% stake.”

The other cost cutting measures initiated by the bank include shifting 400 of its branches to less expensive locations or reduce size to save on costs. It has also reduced its contract marketing staff by about 500 as it has scaled down lending operations. The bank will also shut down 55 branches and also streamline its ATMs as it shrinks its balance sheet.

The bank is also looking at selling stake in its mutual fund subsidiary where it holds 67% with the remaining 33% stake held by IDBI Caps.

The bank is looking to sell its entire holding in IDBI Caps to a strategic investor with some management control. The bank is yet to decide on its stake sale plans and cede management control of the mutual fund business.

The 48% stake that IDBI Bank holds in IDBI Federal Life, a joint venture between IDBI Bank and Federal Bank with Belgium-based Ageas SA/NV as the foreign partner, will be another asset sale during the financial year where the bank has received a few bids. Federal Bank and Belgian life insurer Ageas hold 26% each in the joint venture.

But selling family silver and capital infusion has failed to rescue IDBI Bank, which has posted losses for the second consecutive year.

For the financial year 2017-18, IDBI’s losses widened to Rs 8,237.92 crore from Rs 5,158.14 crore reported in the preceding financial year.