The government is exploring a way to transfer a chunk of IDBI Bank's stressed loans to the books of SBI. The top management of the country's biggest lender is unhappy with the idea of toxic assets being imposed on them.
The government would like SBI to 'buy' both non-performing assets (NPAs) and standard stressed loans. SBI is apprehensive that the toxic assets are being offered by IDBI Bank at very unattractive prices. IDBI Bank is willing to take haircuts, on the sales of the loans, of only around 20-50%. Given the quality of the assets, the SBI management believes the discounts need to be much higher, somewhere in the range of 70-85%.
A sale of toxic assets would make IDBI Bank's balance sheet cleaner and the lender more eligible for an investment or takeover by a strategic investor. While the government, which owns 80.96% of IDBI Bank, has been trying to offload a stake in it for some time now, the effort so far has been unsuccessful.
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SBI not interested in buying IDBI's toxic loans
By IndianMandarins - 2018-05-28 10:15:36
The government is exploring a way to transfer a chunk of IDBI Bank's stressed loans to the books of SBI. The top management of the country's biggest lender is unhappy with the idea of toxic assets being imposed on them.
The government would like SBI to 'buy' both non-performing assets (NPAs) and standard stressed loans. SBI is apprehensive that the toxic assets are being offered by IDBI Bank at very unattractive prices. IDBI Bank is willing to take haircuts, on the sales of the loans, of only around 20-50%. Given the quality of the assets, the SBI management believes the discounts need to be much higher, somewhere in the range of 70-85%.
A sale of toxic assets would make IDBI Bank's balance sheet cleaner and the lender more eligible for an investment or takeover by a strategic investor. While the government, which owns 80.96% of IDBI Bank, has been trying to offload a stake in it for some time now, the effort so far has been unsuccessful.
