The Indian operations of the newly-formed, United Bank of Switzerland, a result of the global merger of two Swiss banks, Union Bank of Switzerland (UBS) and Swiss Banking Corporation (SBC), will focus on investment banking and stock market operations. According to SBC sources, modalities are still being worked out for the entire Asian region.
UBS is active in banking activities like leasing, finance and stock broking through its subsidiary, UBS Securities, while SBCs unit, SBC Warburg, is involved in investment banking.
The new bank will be less keen to take fresh assets and focus more on investment banking. This will include seeking GDR mandates, corporate finance and other services like trade financing and gold dealing, a source said.
SBC Warburg has shelved its plan to have stock broking memberships of stock exchanges. It had earlier announced plans to expand its secondary market operations by seeking membership of the NSE.
However, the details of SBC Warburgs venture with SunGrace Mafatlal is not known. SBC Warburg and SunGrace Mafatlal floated a company that sought NSE membership. The SBC arm had a 75 per cent stake in the company.
The stock broking operations of UBS will be utilised by SBC in future. We will bring in our foreign institutional investor clients for enhancing stock broking operations in India through the existing broking facilities of UBS. We initially planned to pump in around $5 million for our stock broking operations. However, we do not have to make any investment for acquiring stock exchange membership cards now, the source added.
When asked who will head the India operations of the merged entity, the source said the regional head for Asia and Pacific operations would initially look into the matter. However, the exact hierarchy in the organisation has yet to be finalised.
The merger of the two banks is expected to result in around 6,000 jobs getting lost.
There is certainly an overlap of operations in administration and research. The amalgamation may result in an estimated 50 people from research, administration and back office, losing there jobs in India, the source added.HDFC, Hudco, NHB share ADB $300m loan
The Asian Development Bank has sanctioned a $300 million loan for housing development in India to three entities Housing Deve-opment Finance Corpo-ration (HDFC), Nat-ional Housing Bank (NHB) and Housing Urban Development Corporation (Hudco.)
The loan has a tenure of 25 years with a five year moratorium. It has to be repaid in equal half-yearly installments over a period of 20 years. The loan comes with a coupon of 40 basis points over the London inter bank offer rate (Libor). The $300 million goes to the three companies in equal share of $100 million each.
The clause attached to the loan is that at least 50 per cent of the amount should be used to provide housing finance for the lower income group.
Of the $100 million that HDFC has been sanctioned, it plans to draw $20 million this week and is talking to banks to cover the foreign exchange risk. It proposes to draw down the loan in a period of 2-to-3 years when it has the foreign exchange cover in place.
The HDFC plan to draw $20 million of its quota indicates that the company has the demand for that kind of money.
The volatility of the foreign exchange market makes it necessary that corporates go in for foreign exchange cover, and that loans of such a long duration cannot be left uncovered.
It would be better for the companies if they cover the downside risk of the rupee appreciating either by using derivatives like options or by using a roll over forward.
The loan has a tenure of 25 years with a five year moratorium. It has to be repaid in equal half-yearly installments over a period of 20 yrs.The loan comes with a coupon of 40 points over Libor
