Dena Bank to auction NPAs

Finalises sale of Rs 188 crore bad assets before end of FY08.

Mumbai-based Dena Bank will auction Rs 188.4 crore of its non-performing assets (NPAs) to bring down gross NPAs below 2.5 per cent by March 2008.

"We have finalised a portfolio of 49 borrowers (including operating and closed units) with an aggregate principal balance of Rs 188.40 crore. These loans will be sold in either one or multiple tranches," a senior bank official said.

All of the loans are commercial. Chairman and Managing Director P L Gairola said,"This process (auction) will help secure better value for these assets than sale through bilateral negotiations."

The move is aimed at cleaning up the balance sheet and, perhaps, add to the bottom line. The bank wants to complete the auction process by February-end. Three prospective investors, including an asset reconstruction company, have shown interest, another official said.

The data room for investors will open on February 20 and the entire process is expected to be completed before close of the financial year.

At 3.09 per cent, the bank's gross NPAs declined to Rs 657.01 crore at December 2007-end from Rs 857.83 crore (4.99 per cent) a year ago.

The public sector bank has a target of reducing its gross bad loans to below 2.5 per cent by end of March.

Net NPAs reduced to Rs 293.76 crore (1.41 per cent) at end December 2007 from Rs 414.39 crore (2.47 per cent) a year ago. It wants to bring the net NPA ratio below one per cent by financial year end.

Upgradations contributed an improvement in asset quality during the December quarter. The upgradations rose from Rs 8.03 crore in Q3FY07 to Rs 9.73 crore in the last quarter.

Cash recoveries to the tune of Rs 42.13 crore were effected the December 2007 quarter as compared with Rs 66.16 crore in the corresponding quarter last financial year.

The slippages were lower at Rs 81.61 during the quarter as against Rs 126.96 crore in the 2006-07 quarter. The provision coverage for NPAs moved up and stood at 54.71 per cent as against 51.04 per cent at the end of December 2006.