Bank Of India Exits CIBIL As Lenders Attempt To Unwind Non-Core Assets
Bank of India sold its entire stake in TransUnion Cibil for Rs 190 crore.
Public sector lender Bank of India on Thursday informed exchanges that it has exited its entire holding in credit bureau TransUnion Cibil via a sale of shares to U.S. based TransUnion International.
Bank of India sold 12.5 lakh shares for Rs 1,525 each, netting the bank Rs 190.6 crore in proceeds, according to an exchange filing. With this the lender has sold its entire 5 percent holding in the credit bureau.
CIBIL was one of the many non-core investments on the books of Bank of India. According to the bank’s 2015-16 annual report, in addition to CIBIL, it had investments in Central Depository Services India Ltd (CDSL), National Collateral Management Services Ltd, SWIFT India Domestic Services Ltd and SME Rating Agency Of India Ltd. Apart from these, the bank has another handful of small investments, shows the annual report.
Most of these investments are being carried at book value and their market value may be higher.
The government has been pushing public sector banks to unlock capital through various means including the sale of non-core assets. This would help provide banks a buffer at a time when non-performing assets are high and capital adequacy ratios are low.
Bank of India's gross non performing assets have risen to 13.38 percent in the December 2016 ended quarter from 9.18 percent in the corresponding quarter last year. It’s tier-1 capital adequacy ratio is 7.7 percent.
Instead of providing capital unconditionally, the government has asked banks to take corrective measures in return for capital. On March 20, the government outlined a set of strict conditions for public sector banks while announcing the second tranche of capital for the financial year. One of the conditions is the disposal of non-core assets.
Other banks are also trying to unlock non-core assets. On February 21, IDBI Bank informed exchanges that it would look to sell such assets. The bank didn’t specify what assets it intends to sell and over what period of time.