ET: Deutsche Bank & SC Lowy bid for Central Bank loan auction

7 March 2019: Distressed asset funds of Deutsche Bank and Hong Kong’s SC Lowy have bid for the Essar Steel and Bhushan Power & Steel loan accounts put up for sale by Central Bank of India, said two people familiar with the matter. 

“Both Deutsche Bank and SC Lowy have submitted expressions of interest on Tuesday for the two accounts,” said one of the persons cited above. Those are unbinding bids. 

Central Bank of India and SC Lowy didn’t respond to ET’s email queries. Deutsche declined to comment. 

Central Bank has unpaid dues of Rs 423.61 crore for the Essar Steel loan, and its exposure is Rs 1,550 crore to Bhushan Power & Steel. Reserve prices were pegged, respectively, at Rs 415 crore and Rs 709.50 crore, below which no unbinding bid would be accepted. 

The state-owned bank last Saturday put sticky loans worth Rs 3,300 crore up for sale as it aims to improve its fourth-quarter earnings. 

Such asset sales are aimed at cleaning the bank’s books and reduce bad loan provisions so that the lender could turn profitable at least in the Jan-march quarter. 

The pool of bad loans also included Alok Industries and Bombay Rayon Fashions. 

The bank would evaluate those initial bids and then follow them up with the “Swiss Challenge Method”. This gives an opportunity to other bidders to match or surpass the highest bid, which is achieved through the e-auction process. 

While these loan accounts are going through bankruptcy proceedings at various benches of the National Company Law Tribunal (NCLT), the sluggish progress in resolutions has prompted lenders to put those loans on the block before the close of the financial year. 

Central Bank MD & CEO Pallav Mahapatra had said last week that the lender expects a write-back. “We have made adequate provisions for these loans and have already received binding offers…Whatever bids we receive above the offers we have will be written back in our accounts for the quarter,” Mahapatra had then said. 

A few weeks earlier, SBI had put Essar Steel loans up for sale. Only Bank of America ML showed interest. The lender is believed to have decided to shelve the process in the absence of more than one bid.

The Economic Times reported

Categories: General News, India Bankruptcy

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