Money & Banking
Nearly half of Indian banks risk breaching capital triggers: Fitch Ratings
Nearly half of the Indian banks run the risk of breaching the capital triggers owing to the progressive increase in minimum capital needs under Basel III norms, said credit rating agency Fitch Ratings.
 
According to Fitch Ratings, the government-owned banks are more at risk due to their poor existing capital buffers and weak prospects for raising capital from the market.
 
Analysing 27 Indian banks with outstanding hybrid capital instruments, Fitch Ratings said at the end of June, the total capital adequacy ratio (CAR) for 11 banks was at or lower than the minimum of 11.5 per cent required by end-March 2019 (FYE19).
 
"Of these, six did not have enough capital to meet the minimum required by FYE17. The minimum total CAR is a prerequisite for payment of coupons on both legacy and Basel III perpetual debt capital instruments," it said.
 
According to the credit rating agency for Basel III perpetual instruments, coupon deferral is also linked to banks meeting both minimum regulatory common equity tier 1 (CET1) ratio and Tier 1 ratio. More than half of the banks currently have a CET1 ratio that is below the required eight per cent minimum that will be applied from FYE19.
 
Fitch Ratings estimates the Indian banks would need around $90 billion fresh capital by FYE19 to meet the Basel III standards, with the state banks accounting for about 80 per cent of the total.
 
The government has already earmarked Rs 700 billion ($10.4 billion) for capital injections into state banks through to FYE19 and in July, it announced that Rs.229 billion ($3.4 billion) was being frontloaded.
 
According to Fitch Ratings, capital injections may not be sufficient to address their ongoing capital needs to meet required provisions and to support balance sheet growth.
 
As it stands, state banks are heavily reliant on the government for new capital. Sharply deteriorating financial profiles have raised the standalone credit risks of state banks over the last year and equity valuations have suffered as a result. Most continue to trade at heavy discounts to their book value, which acts as a significant constraint on raising new core equity.
 
The State Bank of India's proposed $1 billion issuance of dollar-denominated Additional Tier 1 (AT1) instruments will be the first cross-border deal, and Fitch Ratings believes the issuance will serve as a pricing benchmark for other banks keen to access the dollar AT1 market.
 
The Reserve Bank of India's recent proposal to allow banks to issue "masala bonds" - rupee-denominated bonds issued in offshore capital markets - could also help widen the investor pool and ultimately deepen the market for AT1 bond issuance, it said.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
  

 

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HP to buy Samsung's printing business for USD1 bn
Samsung Electronics on Monday said it has agreed to sell its printer business unit to US personal-computer maker HP. While the deal size has not been divulged, industry watchers put the figure at $1.05 billion.
 
The transaction is part of its "efforts to concentrate on its core business areas", Samsung said. Under an agreement, Samsung will source printers from HP and continue to market them in Korea under the Samsung brand, the company said in a statement.
 
"Samsung will spin off the printing business unit into a separate company as of November 1 upon the approval of shareholders, and sell a 100 percent stake of the newly created company and overseas assets related to the business to HP," the statement said.
 
The transaction is expected to close within one year, subject to the appropriate regulatory approvals.
 
Samsung's printing business, with 6,000 employees, a production base in China as well as more than 50 sales offices globally, posted 2 trillion Korean won in revenue in 2015, according to the statement.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

 

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Snapdeal spends Rs200 crore just on rebranding!
With e-commerce already on shaky ground, the report that Snapdeal, a major player in the business, plans to burn a massive Rs200 crore on rebranding and marketing has caused a flutter. The e-commerce company launched its re-branding exercise with an expensive splash in the largest print daily. The irony of this seems lost on those making the funding Snapdeal's ambitious agenda to woo around 10 crore potential online buyers with a new logo. The company, which was set up in 2010, has changed its logo twice in its short six-year existence. 
 
Kunal Bahl, chief executive and co-founder of Snapdeal is quoted by media as saying, "There are about 5 to 6 crore online buyers in India currently and for e-commerce to become larger, the next 30-40 crore people coming online would be very important... Things like discounts, fast shipping, functional benefits are already there, but going ahead, e-commerce brands will have to stand for something of a higher order". It is not clear how re-branding is going to help any of it. 
 
Mahesh Murthy's acerbic tweet calling it a "Rs 200 crore for a new paint job on the Titanic" probably captures the sentiment best. Murthy, founder of Pinstorm and venture capitalist triggered a storm of comments suggesting that this was Snapdeal's last hurrah. Some even compared it to housing.com funded by the same venture capitalist, which has all but sunk.
 
 
 
 
The re-positioning by Snapdeal comes ahead of the festive season. Other big players and Snapdeal's competitors like Amazon and Flipkart are also lining up offers to woo customers to shop on their platform. 
 
Snapdeal has done away with its blue and red logo, replacing it with a Vermello (red)-coloured box.
 
The rebranding campaign of Snapdeal is conceived by Prasoon Joshi and his team at McCann while Shankar, Ehsaan and Loy have worked on the jingle.
 
A tweet about a quartz India articles says, Snapdeal needs more than just cosmetic surgery. 
 
   
 
Basically, it asks how a change in logo is going to attract new customers to the e-retailers' growth, which appears to be flagging across the industry.
 
Earlier in February, Snapdeal, in fresh funding, raised $200 million from investors led by Canada-based Ontario Teachers' Pension Fund, venture capital fund Iron Pillar and others. Last year, it had raised $500 million from Chinese e-commerce Alibaba group, Foxconn Technology group and Softbank group, its existing investor.
 
Snapdeal is promoted by Delhi-based Jasper Infotech Pvt Ltd, and have over 2.75 lakh sellers who sell more than three crore products on the online platform.
 
 
According to a report from Live Mint, Jasper Infotech reported losses widening to Rs1,328.01 crore for the year ended 31 March 2016 from Rs264.6 crore previous year as it spent heavily to maintain its market share amid growing competition from Amazon and Flipkart.

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COMMENTS

Anil Kumar

8 months ago

Agree. Snap Deal needs more than rebranding. 'Tried ' twice to buy something from Snap Deal - as it wasn't available on any other portal. Both times failure. First time - the vendor & snap deal had some dispute - so order got auto-cancelled. Second time - the product - Rs. 200 - was tagged with a add-on product of Rs. 2000 !!

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