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Standard Chartered looks to sell distressed loan portfolio worth $1.6 billion


Standard Chartered Bank’s India operation is seeking buyers for its $1.6 billion distressed loan portfolio comprising corporate debt in an effort to clean up its books, said two people aware of the development.

Standard Chartered (StanChart) circulated a ‘teaser note’ inviting bids for the ₹12,500 crore portfolio that was reviewed by ET.

About 98% comprises rupee-denominated loans and the remaining 2% consists of bonds. It’s one of the largest non-performing asset (NPA) pools being sold as a single block by any bank in recent times. In the past, Indian banks have sold portfolios of individual loans and small-ticket debt of not more than ₹1,000 crore at a time. The portfolio includes the debt of 57 companies in manufacturing, trading, engineering, procurement and construction.

StanChart declined to comment.

The bank is seeking all-cash offers from asset reconstruction companies, according to the note. Potential buyers will have to bid for the entire portfolio and cherry-picking won’t be permitted, it said.

StanChart has also indicated that it will hold a Swiss challenge auction after receiving binding bids from buyers.

The lender is aiming to close the deal by the end of the second quarter of FY22, said the note. It will only share details of the borrowers with potential buyers who sign non-disclosure agreements, it said.

NPA Provisions at $23 Million in 2021

“It’s a mixed basket – although 84% by value are secured loans, nearly 44% by value are classified as fraudulent accounts,” said an ARC executive. “The recovery from the top 10 accounts would make for the rest of the pool.” StanChart’s India operations reported a $516 million profit after tax for the year ended December 2021, up 53% from $337 million in the previous year. The rise in profit was due to a 90% decline in bad loan provisions, as ET reported on February 23. The provisions for non-performing loans were at $23 million against $227 million in the previous year. The bank did not disclose the share of NPAs to the total loan book. The loan book from India operations was at $14.99 billion for the year ended December 2021, up by 5% from the previous year. In the same period, operating income from India was at $1.28 billion, the second highest after Singapore.



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