PSU banks take Rs165 crore hit as Kingfisher shares tank
11 Apr 2011
New Delhi: Eleven public sector banks have seen an erosion of about Rs165 crore in the value of the 17.5 per cent equity held by them in debt-ridden carrier Kingfisher Airlines. These shares were allotted to them by Kingfisher as part of a debt recast package.
Banks, including State Bank of India, Punjab National Bank , Bank of India and the IDBI Bank were allotted 8.8 per cent shares of the airline on 31 March 2011, at Rs64.48 a share. But even before the actual allotment took place the market price of the share had declined to Rs40.95. Though there was some improvement in share value since, overall there has been considerable erosion in value of the shares allotted to the PSUs.
In all 13 banks, including private sector ICICI Bank, agreed to convert loans worth Rs750 crore into equity from a total Kingfisher debt of about Rs7,600 crore. Bulk of this conversion, Rs568 crore, concerned the PSU banks.
The value of this portfolio tanked to Rs403 crore, resulting in an erosion of Rs165 crore.
The debt recast package was agreed to by a consortium of banks led by State Bank of India in November last year. RBI cleared these packages as the aviation industry was undergoing tough times hit by global uncertainties.
Kingfisher Airlines has incurred a loss of Rs253.69 crore in the quarter ended December 2010 even as rival Jet Airways posted a profit of Rs118.23 crore.