Dena Bank to sell Rs 600 crore NPAs

Sale will include Rs 1,400 crore written-off bad loans.

Mid-sized public sector bank Dena Bank is taking steps to clean its balance sheet of non-performing assets (NPAs). It is in the process of selling a large chunk of its NPAs.

The Mumbai-based bank, having a larger presence in the western region, plans to sell Rs 600 crore of NPAs in two phases "� in the third and fourth quarters of 2006-07.

P L Gairola, chairman and managing director of the bank, told Business Standard, "In the first phase, we will be selling Rs 300 crore worth NPAs by the end of December 2006."

Dena Bank recently appointed consulting firm PricewaterhouseCoopers to advise it on the proposed sale of Rs 600 crore NPAs.

The bank had NPAs of Rs 975 crore at the end of June 2006, apart from written-off NPAs of Rs 1,400 crore. The planned sale of Rs 600 crore NPAs would also include the written-off NPAs, Gairola said. The corporate sector accounts for 53 per cent of the bank's total NPAs.

It expects to bring down its gross NPAs to below 4 per cent from 6.4 per cent at the end of June 2006 and net NPAs to 1.5 per cent from 3.24 per cent. The average net NPAs of all commercial banks at the end of June 2006 stood at 1.22 per cent.

On being asked if there were any intentions to merge Dena bank with any other bank, the CMD said, "We are open to the option of merging with other banks. Once NPAs are brought down substantially, the bank's profitability will increase, and this will make it an attractive bank to merge with."

Although the bank did not have any immediate plans for a merger, it would look at it with interest if any proposal was put forth.

The bank's advances grew 24 per cent to Rs 14,231 crore in 2005-06. It expects advances to expand to Rs 18,000 crore and deposits to Rs 31,000 crore from Rs 23,623 crore a year earlier, by the end of 2006-07.

Dena Bank was back in the black reporting a net profit of Rs 18.49 crore in the first quarter of 2006-07, after suffering a loss of Rs 189.3 crore a year earlier.