Bank of India, a public sector bank based in Mumbai, is reportedly looking forward to raising Rs.1,000 crore by selling some of its non-core assets and properties. Reports indicate that Bank of India is likely to raise Rs.800 crore by selling its stake in development financial institution SIDBI and non-banking financial services provider STCI Finance.
The bank currently holds 29.96% stake in STCI Finance. By selling its entire stake in the company, Bank of India aims to raise about Rs.500 crore. The bank also aims to raise another Rs.300 crore through the sale of its 2.84% stake in SIDBI. In addition to this, the bank is planning to sell some of its real estate properties for a total of Rs.200 crore. The bank has sought the services of about nine merchant bankers to explore potential buyers in the market.
Bank of India offered its shares in STCI Finance for sale a year ago. However, lower than expected bid values prevented the bank from proceeding with the sale. STCI Finance provides financial services in various areas like real estate, capital markets, corporate finance, etc.
In June 2016, the bank sold 18% of its stake in Star Union Dai-Ichi Life Insurance and raised Rs.540 crore. Following the sale, Bank of India currently owns about 28.96% stake in the insurance firm. Union Bank of India and Japan-based Dai-Ichi Life Insurance are the two other major stakeholders in Star Union Dai-Ichi Life insurance with holdings of 25.1% and 45.94% stakes, respectively.
Bank of India is one of the public sector banks in India which has been adversely affected by non-performing assets (NPAs). As of March 2018, the bank’s NPAs as a percentage of total loans stood at 16.58%. Also, for the quarter ended March 2018, the bank reported a net loss of Rs.3,969 crore. This huge loss can be attributed to the bank allocating a substantial portion of its funds to cover for its bad loans. This capital raising exercise comes as a part of the bank’s efforts to offset NPAs.
Source: Economic Times