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SBI clients may have lost Rs700 cr in derivative bets

SBI clients may have lost Rs700 cr in derivative bets
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First Published: Wed, Apr 23 2008. 10 57 PM IST

Taking stock: SBI chairman O.P. Bhatt.
Taking stock: SBI chairman O.P. Bhatt.
Updated: Wed, Apr 23 2008. 10 57 PM IST
Mumbai: The nation’s largest bank, State Bank of India (SBI), said its customers may have lost as much as Rs700 crore because of currency derivatives trading in the year ended 31 March.
Taking stock: SBI chairman O.P. Bhatt.
“We have been in derivatives and have done deals for our own customers with underlying assets,” chairman O.P. Bhatt said on Wednesday. “They made profits a year back. This year, they may make a loss of Rs7 billion.”
Losses for Indian firms mounted in the year to March as their currency derivatives bets soured because of the unexpected appreciation of the Swiss franc and Japanese yen against the US dollar. Many companies had taken bets in these low-interest currencies to protect themselves from the rupee’s gains, which climbed the most in more than three decades against the dollar.
Bhatt said the bank doesn’t face any court cases from companies on derivative transactions and it won’t set aside funds to cover losses in its earnings for the year ended March. The results are scheduled to be released on 2 May.
SBI expects loan growth to be lower in the year ending March 2009 as higher interest rates and inflation lead to reduced consumer spending.
The bank may also set aside about $10 million (Rs40 crore) for potential losses because of the meltdown in the credit markets after the US subprime crisis began last year.
-Sumit Sharma/ Bloomberg
M.C. Govardhana Rangan contributed to this story.
Oriental Bank posts Rs99.4 cr loss in Q4
New Delhi: State-run Oriental Bank of Commerce posted a net loss for the January-March quarter, as it brought forward an extraordinary item which was to be recorded in the current fiscal year, its chairman said on Wednesday.
Oriental Bank had been booking losses of about Rs61 crore every quarter as it was mandated to absorb losses of Rs1,225 crore of Global Trust Bank by 2009, after the government facilitated the merger of the two banks in 2004.
“In other words, we have preponed by one year and absorbed losses, which we were to have offset from our profit next year, this year,” chairman Alok Misra said.
For the fourth quarter, the bank reported a loss of Rs99.44 crore, compared with a profit of Rs54.86 crore in the year-ago period. The March quarter loss included a one-time charge of Rs304 crore, which includes Rs242 crore that was to be recorded in 2008-09, Misra said.
Excluding the charge, the bank’s net profit for the quarter grew 75.2% to Rs205 crore, up from Rs117 crore a year ago. The bank’s total income rose to Rs2,071 crore from Rs1,577 crore a year ago. Interest income rose to Rs1,910 crore, up from Rs1,434 crore.
Shares of the bank dropped 8.23% after the results, but recovered to close down 3.55% at Rs194.45 in a weak Mumbai market.
Crisil lowers ratings for Citigroup, Merrill
New Delhi: Taking into account the credit profile of Citigroup Inc. and Merrill Lynch and Co., along with the economic scenario in the US and Europe, rating agency Crisil Ltd adopted a cautious stance on some Indian arms of the global financial firms.
While downgrading its outlook on the long-term ratings from “stable” to “negative” for Citigroup’s four Indian arms, Crisil also made a downward revision of the long-term ratings and outlook for two companies belonging to <company>DSP Merrill Lynch Ltd.
The long-term ratings and a stable outlook have been, however, reaffirmed for Citibank, the core banking arm of Citigroup, Crisil said in a statement.
In addition, the agency has left unchanged its ratings and outlooks for two Indian arms of ABN Amro Bank NV and one each of foreign players such as <company>HSBC Bank Plc., DBS Bank Ltd, DSP Merrill Lynch, ING Groep NV, Rabobank Group and Bank of Nova Scotia.
India in 4-nation talks for natural gas pipeline
Islamabad: South and Central Asian officials opened talks on Wednesday on a pipeline to carry natural gas from energy-rich Turkmenistan to Pakistan and India by way of Afghanistan, a spokesman said.
Oil ministers, officials and experts from the four countries will discuss a range of matters relating to the proposed project during the two-day talks in Islamabad, Pakistan foreign ministry spokesman Mohammed Sadiq said.
He said officials and experts from Pakistan, Iran and India would also meet later this week in the Pakistani capital to discuss another multibillion dollar gas pipeline—one opposed by the US, which is trying to isolate Iran because of its nuclear programme.
The second project has been delayed in part because of Indian worries about the safety of portions of the pipeline running through Pakistan.
Baalu admits seeking gas for sons’ firms
New Delhi: Union shipping and surface transport minister T.R. Baalu on Wednesday admitted that he had “put in a word” with the petroleum minister for allocation of gas to two companies which he had headed in the past.
“I put in a word with the petroleum minister. What is wrong in it?” Baalu retorted after All India Anna Dravida Munnetra Kazhagam member V. Maitreyan said in the Rajya Sabha that the minister had misused his official position to get gas for the two companies owned by his sons and their wives.
In his defence, Baalu said he was managing director of the two companies before he became a minister in the National Democratic Alliance (NDA) government.
The companies had entered into an agreement with GAIL (India) Ltd for allocation of 10,000 cu.m gas. But within days of his resignation from the NDA government in 2003, the gas allocation was cancelled.
Baalu said that on request from many of the 40,000 shareholders and in the interest of employees, he did put in a word to the petroleum minister.
Govt to take sense of House on nuke deal
New Delhi: Seeking to assure the Left allies who have been opposing the India-US civil nuclear deal, the government on Wednesday said it will take the sense of the House on the agreement before it is taken up for ratification by the US Congress.
“Before we go for its (India-US nuclear deal) ratification in the American parliament, we will come to Parliament to take the sense of the House even though there is no provision in the Constitution that stands in our way,” external affairs minister Pranab Mukherjee said.
Meanwhile, the ruling United Progressive Alliance and its Left allies will meet here on 6 May to discuss the state of government’s negotiations with the International Atomic Energy Agency (IAEA) on the safeguards agreement for implementing the nuclear deal.
Disclosing this, senior Communist Party of India-Marxist leader Sitaram Yechury said, “We will consider what the government will report to us on its talks with the IAEA. On that basis, we will take the issue forward.”
BoA decision soon on Goa SEZ denotification
Mumbai: The Board of Approval (BoA), which authorizes the setting up of special economic zones, or SEZs, is expected to arrive at a decision on the controversial denotification of three SEZs in Goa at a meeting on 30 April.
The board has called the developers of SEZs and representatives of the Goa government to the meeting for a discussion. A commerce ministry official confirmed that the board will meet by the end of the month for new approvals and to decide on pending issues.
The SEZs, which were to be developed by Peninsula Pharma Research Centre Pvt. Ltd, K Raheja Corp. Pvt. Ltd and Meditab Specialities Pvt. Ltd, an associate of drug maker Cipla Ltd, had received the necessary approvals but ran into trouble after the Goa government changed its mind and decided against the development of these projects.
Meditab then filed a petition at the Goa bench of the Bombay high court questioning the state’s decision to stop development work at its SEZ.
The Union government is considering a compensation package for the developers of the three SEZs in Goa if the projects are denotified, a person familiar with the development had said. He did not wish to be identified.
--C.H. Unnikrishnan
Fresenius makes open offer for Dabur Pharma
Mumbai: After acquiring 73.27% equity in Dabur Pharma Ltd, Fresenius Kabi (Singapore) Pte Ltd on Wednesday made an open offer to Dabur’s shareholders to buy another 20% stake.
Dabur Pharma is India’s largest cancer drug maker and it also has market presence in another 40 countries.
Morgan Stanley India Co. Pvt. Ltd will manage the open offer, made at a price of Rs76.50 for each share carrying a face value of Re1.
The open offer is made in accordance with the take over code of the Securities and Exchange Board of India.
--C.H. Unnikrishnan
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First Published: Wed, Apr 23 2008. 10 57 PM IST
More Topics: SBI | Derivatives | OBC | Crisil | Citigroup |