standard Chartered (stanchart) circulated a ‘teaser note’ inviting bids for a ₹12,500 crore portfolio, which was reviewed by ET.
About 98% consists of rupee denominated loans and the remaining 2% consists of bonds. This is one of the largest non-performing asset (NPA) pools being sold as a single block by any bank in recent times. In the past, Indian banks have sold portfolios of personal loans and small-ticket loans worth over ₹1,000 crore in one go. The portfolio includes loans from 57 companies in manufacturing, trading, engineering, procurement and construction.
Stanchart declined to comment.
According to the note, the bank is seeking cash offers from asset reconstruction companies. Potential buyers will have to bid for the entire portfolio and cherry-picking will not be allowed.
StanChart has also indicated that it will conduct a Swiss Challenge auction after receiving binding bids from buyers.
The note said the lender is aiming to close the deal by the end of the second quarter of FY22. It will share details of borrowers only with potential buyers who sign non-disclosure agreements, it said.
NPA provision at $23 million in 2021
“It is a mixed basket – although 84% are secured loans by value, about 44% by value are classified as fraudulent accounts,” said an ARC executive. “Recoveries from the top 10 accounts will be for the balance pool.” Stanchart’s India operations reported a profit after tax of $516 million for the year ended December 2021, up 53% from the previous year’s $337 million. The increase in profit was on account of a 90% drop in bad loan provisions, as reported by ET on February 23. Provisions for non-performing loans stood at $23 million against $227 million in the previous year. The bank did not disclose the shares NPA in the total loan book. The debt book from India operations stood at $14.99 billion for the year ended December 2021, up 5% from the previous year. In the same period, operating income from India was $1.28 billion, second only to Singapore.