SBI upbeat on foreign expansion; to scale up Singapore Operations

The country's largest lender, State Bank of India, has chalked out strategies to grow aggressively in overseas markets, especially Singapore, in this fiscal, a top SBI official said. This would help the Indian banking behemoth to move a step closer to consolidate its position in the global financial services industry. SBI is in advanced stages of setting up offices in the Middle East, South Africa, Saudi Arabia, the UK and Hong Kong, and would mainly focus on corporate banking and project financing in these locations, the official said. "We have plans to move to all geographies across the globe, where Indian coporates have operations. The bank would act as a facilitator in all areas for these entities to grow their business," the official said. In Singapore, where it currently have six branches and five ATMs, SBI would increase its presence to at least 16 locations by June, the official said. In Saudi Arabia, SBI has already secured approval for setting up its first branch at Jeddah, which is likely to be operational by the fiscal-end. State Bank, which has a balance sheet size of Rs 9.77 lakh crore as at end-June 2009, is also actively looking at expanding operations in South Africa. "This (South Africa) is a market, where we are actively looking at expanding the operations by setting up offices in a number of locations," the official said. Presently, SBI has three offices in South Africa. As of now, the banking major has presence in 132 overseas centers that includes 64 branches under five subsidiaries. These subsidiaries are Indonesia (6 branches), Mauritius (12 branches), Nepal (32 branches), California (7 branches)and Canada (7 branches). The bank's Dubai branch had received category I license in end-2008, allowing it to undertake all banking operations except retail banking activities. In the period ahead, the lender is also open to acquiring smaller banks in overseas markets and is constantly evaluating the options, the official said. Overseas business currently contribute around 12 per cent of SBI's balancesheet.

RNRL wants SC to make NTPC party to its case against RIL

Alleging that Mukesh Ambani-led RIL was trying to wriggle out of gas supply contracts with NTPC and itself, Anil Ambani group firm RNRL today asked the Supreme Court to make the power PSU a party to its ongoing case against RIL. The move comes within days of RNRL approaching the apex court to become a party to the petition filed by NTPC against RIL that seeks quashing of the Bombay High Court, which allowed the Mukesh Ambani group firm to amend its petition. Listing out the details of NTPC's case, RNRL said: "RIL had adopted the same malafide design of inserting unsuitable terms in the respective gas supply agreements with RNRL and NTPC to renege from its binding obligations. This was as a result of pure commercial greed in as much as the gas prices had started rising." Both RNRL and NTPC are seeking gas from RIL's KG-D6 fields at a price of USD 2.34 per mmBtu, while RIL now argues that the price needs government approval. The pleadings come ahead of the commencement of final hearing on the matters by the Supreme Court on October 20.

Govt. issues Rs 103.06 bn bonds to IOC, HPCL & BPCL

The government today issued bonds worth over Rs 103.06 billion to three oil marketing public sector undertakings (PSUs) to compensate them for the losses incurred on account of selling petroleum products below market price. While bonds worth Rs 62.07 billion were issued to Indian Oil Corporation (IOC), Rs 20.33 billion worth bonds were given to Hindustan Petroleum Corporation (HPCL) and Rs 20.65 billion bonds were given to Bharat Petroleum Corporation (BPCL). The government of India (GoI) special bonds carry coupon rate of 8.20% and would mature in 2024. The bonds were issued to these companies as they incur losses by selling petrol, diesel kerosene and domestic LPG below cost. The special bonds are being issued to three oil marketing companies (OMCs) as compensation towards the estimated under-recoveries on account of sale of sensitive petroleum products during the current financial year.

RCom, Financial Tech to sign m-commerce agreement

Integrated telecommunications service provider Reliance Communications (RCom) is in advanced stages of negotiations with Atom Technologies, a group company of NSE-listed Financial Technologies India Ltd (FTIL), for a mobile commerce (M-commerce) agreement. If signed, RCom expects total revenues of around Rs 800 crore over the next three years, sources close to the development told Business Standard. The tie-up is part of RCom’s thrust to enable new revenue streams from m-commerce. The agreement will enable RCom to offer mobile-enabled transactions across Indian and foreign banking institutions. The Anil Ambani group company will offer an inter-operable payment platform Reliance Mobile (its GSM brand). Atom will offer RCom multiple banks (Indian and Foreign) and merchants on a common platform, thereby allowing its subscribers to make payments across all merchant bases. On its part, Atom technologies will offer RCom subscribers an enabling environment to purchase insurance services, DTH recharges, movie tickets, books and periodicals, consumer goods, holiday packages and bus and train tickets. At present, Atom Technologies has over 100 merchants registered for m-commerce transactions. When contacted an RCom spokesperson confirmed the development. “Our discussions with Atom Technologies are part of our m-commerce thrust to offer value propositions and enhance overall mobile experience of over 80 million Reliance Mobile subscribers in the country,” he said. He, however, declined to comment on the financial details and revenue expected in case of the deal being signed. While M-Commerce is in its nascent stages, it is slated to boom over the next few years with growing sophistication and lower prices of mobile handsets. NSE-listed FTIL offers technology Intellectual Property (IP) and domain expertise for financial exchanges (like equities, commodities, currency and debt). At present, it owns and operates 10 national and international exchanges across Africa, Middle East, India and South East Asia.

GAIL signs pact with Kerala for developing gas infra

State-run GAIL India today said it has signed a memorandum of understanding (MoU) with Kerala to develop natural gas infrastructure and city gas distribution network in the state. The MoU was signed by GAIL Executive Director (Marketing) J Wason and Kerala State Industries Development Corp Managing Director Alkesh Sharma in Thrivananthpuram yesterday. Speaking on the occasion, GAIL Chairman and Managing Director B C Tripathi said the gas cooperation MoU aims to develop the natural gas distribution and city gas infrastructure and promote use of eco-friendly fuel. It also seeks to set up a joint venture for marketing of gas or CNG to domestic, industrial and transport sectors. GAIL and KSIDC would initiate a joint exercise for immediate assessment of demand for natural gas in the state. The two would also conduct techno-economic studies for laying pipelines to demand centres and setting up city gas distribution network in towns. "The MoU also provides for GAIL and Government of Kerala to identify industrial clusters for distribution of natural gas as fuel and to determine modus operandi for setting up of joint ventures by GAIL," the release said. The GAIL board has already approved laying of 1,114-km Kochi-Kanjirkkod-Mangalore-Bengaluru pipeline at an estimated cost of Rs 3,032 crore. The pipeline, GAIL said, can carry 16 million standard cubic meters of gas per day. In phase-1 of the project, 94 km pipeline will be laid from Kochi to Alwaye to connect Petronet LNG's upcoming liquefied natural gas (LNG) import terminal at Kochi to markets in the region. The pipeline being laid at an investment of Rs 267.50 crore is scheduled to be completed by 2011-12. A 1018-km pipeline will be laid from Alwaye to Kanjirrkkod, Mangalore, Palghat and Bengaluru in phase-II at an investment of Rs 2,764.50 crore by 2012-13. "GAIL will also be laying 1,389-km Dabhol-Bengaluru pipeline at an investment of Rs 4,543.43 crore... (and) will be connected to the Kochi-Kanjirkkod-Bengaluru pipeline," it added.

UK banks to post $215-bn losses, says Moody’s

UK banks are less than half way through posting £240 billion ($398 billion) of losses on loans and securities, a reflection of the country’s economic weakness, according to Moody’s Investors Service Ltd. British banks are likely to record £130 billion of losses in the next 12 to 18 months, in addition to £110 billion lost since the beginning of the credit crisis, Moody’s said in a report. The company “expects the sustained weakness of the UK macroeconomic environment to feed through into higher loan arrears with ensuing pressure on profitability and capital,” it said. British taxpayers have provided about £1.4 trillion of support to banks, becoming the biggest shareholder of Royal Bank of Scotland Group Plc and Lloyds Banking Group Plc, while seeking to shore up capital eroded by writedowns. British banks have raised about 120 billion pounds of capital from the beginning of the credit crisis to mid-2009, Moody’s said. The company’s “base case scenario” anticipates a 40%peak-to-trough decline in British house prices and a 60% drop in commercial property, the report said. Banks face pressure on capital, along with depressed revenue and profitability, from the higher costs of attracting deposits and wholesale funding, Moody’s said.

Govt open to dual listing of MTN, says is permissible

The government said today it is open to the dual listing of MTN, which is in an exclusive talks with Bharti for a merged entity of $23 billion, on the stock exchanges of India and South Africa as there is a provision to this effect. The South African government is learnt to have sought dual listing for MTN that would allow MTN shares to be traded on the Indian and South African bourses simultaneously with equal voting rights. "There is a provision for the dual listing of companies. The South African minister met me at G-20 finance ministers meeting and there I suggested to him that this arrangement is to be looked into in the Indian context," Finance Minister Pranab Mukherjee told reporters here. "There is no assurance as such, but I told him (the South African minister) that we will look into this matter and we will see what can be done," he said. Asked whether the dual listing can be done under existing laws, Mukherjee said that is being examined. According to sources, the South African government has asked India to enter into an agreement before the September 30 deadline that would allow dual listing of MTN. Bharti and MTN have been engaged in exclusive talks since May for a deal that will see the Indian company hold a 49 per cent stake in MTN, which in turn will hold a 36 per cent stake in India’s top mobile operator. The firms have extended talks twice. The deal will have to clear several regulatory hurdles and requires the shareholders' endorsement in South Africa and India. Rules in South Africa requires that 75 per cent of the shareholders must be present and voting to clear the merger. Several of MTN's shareholders have openly said they want Bharti to offer a higher price which would see the Indian company forking out more cash. Sebi has already exempted MTN from making an open offer if a merger deal materialises, provided it does not convert its GDRs into equity. The South African government has made it clear that the company has to retain its character as a African company. Tiyani Rikhotso, a spokesman for Communications Minister Siphiwe Nyanda, is quoted to have said “We obviously value MTN as a South African company; we want it to retain that character.” Public Investment Corp, the South African government pension fund administrator, owns 24 per cent of MTN and has raised several concerns about the tie-up.