Bank loans to Satyam may turn NPLs
In the light of Satyam Computer's financial irregularities, there are questions being raised on the loan exposure of Indian banks to the company.
By Nishanth Vasudevan, ET Bureau |
In thelight of Satyam Computer's financial irregularities, there are questions beingraised on the loan exposure of Indian banks to the company. Analysts note that,given the overstatement in cash on the balance sheet, the loans to Satyam couldbecome non-performing loans(NPLs).
"The total secured debt(as of Sep'08) as per Satyam's b/s was Rs2530mn (US$ 55mn)... but given the overstatement in terms of cash balances, the loans could become NPL's. Unsecureddebt was around Rs2350mn (but less likely from banks)," said Merrill Lynchbanking research & economy's MD, RajeevVarma.
Leading banks includingICICI Bank, HDFC Bank, HSBC, Citigroup, BNP Paribas and Bank of Baroda have"exposure" to Satyam, he said in a clientnote.
"While break up detailsare not known, even assuming 30-35% of the debt is with ICICI Bk, it amounts toRs750-850mn it would imply npl's of <0.05% of IBank's loans. For HDFC Bk, theamt could be equal to 0.06% of loans. Likely to be less of an NPL issue forthese banks. ...though leaves unanswered questions on due diligence," Varmasaid.
"Most of its cashbalances (that were overstated to the extent of >Rs50bn) were supposedly withforeign banks such as Citi, HSBC, BNP etc. But again, hopefully, the bank booksshould be tallied (and this should not directly impact these foreign banks)," headded.
"The total secured debt(as of Sep'08) as per Satyam's b/s was Rs2530mn (US$ 55mn)... but given the overstatement in terms of cash balances, the loans could become NPL's. Unsecureddebt was around Rs2350mn (but less likely from banks)," said Merrill Lynchbanking research & economy's MD, RajeevVarma.
Leading banks includingICICI Bank, HDFC Bank, HSBC, Citigroup, BNP Paribas and Bank of Baroda have"exposure" to Satyam, he said in a clientnote.
"While break up detailsare not known, even assuming 30-35% of the debt is with ICICI Bk, it amounts toRs750-850mn it would imply npl's of <0.05% of IBank's loans. For HDFC Bk, theamt could be equal to 0.06% of loans. Likely to be less of an NPL issue forthese banks. ...though leaves unanswered questions on due diligence," Varmasaid.
"Most of its cashbalances (that were overstated to the extent of >Rs50bn) were supposedly withforeign banks such as Citi, HSBC, BNP etc. But again, hopefully, the bank booksshould be tallied (and this should not directly impact these foreign banks)," headded.
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