The Tier-2 bond wipeout could be seen by investors as setting a precedent, given that these instruments can be written off just like the Additional Tier-1 bonds of YES Bank written off earlier this year.(REUTERS)
The Tier-2 bond wipeout could be seen by investors as setting a precedent, given that these instruments can be written off just like the Additional Tier-1 bonds of YES Bank written off earlier this year.(REUTERS)

Borrowing cost may rise for lenders

The troubled private bank on Thursday said it has written down all of its Basel III compliant Tier-2 bonds as advised by the Reserve Bank of India (RBI), which is arranging its merger with DBS Bank India. RBI had previously written down the entire equity capital of LVB as part of the merger.
By Shayan Ghosh | Hindustan Times, Mumbai, Mumbai
UPDATED ON NOV 28, 2020 06:08 AM IST

Lakshmi Vilas Bank’s decision to write down Tier-2 bonds worth Rs 318 crore could increase the cost of borrowing for peers, especially the weaker ones, experts said.

The troubled private bank on Thursday said it has written down all of its Basel III compliant Tier-2 bonds as advised by the Reserve Bank of India (RBI), which is arranging its merger with DBS Bank India. RBI had previously written down the entire equity capital of LVB as part of the merger.

The Tier-2 bond wipeout could be seen by investors as setting a precedent, given that these instruments can be written off just like the Additional Tier-1 bonds of YES Bank written off earlier this year.

“Weaker banks, especially in the private sector, will find it difficult to raise Basel III Tier-2 bonds. So far, people ignored the risk of these bonds that have loss absorption clauses, but Section 45 of the Banking Regulation Act allows RBI to take appropriate action when a bank is at a point of non-viability,” said Ajay Manglunia, managing director and head at JM Financial Products.

According to Manglunia, people never understood that risk, and it is a hard lesson for investors as Tier-2 bonds are not on par with deposits. It did come as a huge surprise and shock to the people holding these papers, he said, adding perpetual and Tier-2 bonds of lower-rated private banks will find it very hard to persuade any class of investors now.

SHARE THIS ARTICLE ON
app
Close
Canadian companies have long struggled to secure top price for their crude as pipeline congestion forced them to sell at a discount.(Reuters)
Canadian companies have long struggled to secure top price for their crude as pipeline congestion forced them to sell at a discount.(Reuters)

Canada's Trans Mountain pipeline sees fortunes shine after Keystone XL's demise

Reuters, Winnipeg/ottawa
PUBLISHED ON JAN 24, 2021 06:22 PM IST
Trans Mountain Corp, a government corporation, is spending CAD 12.6 billion (USD 9.9 billion) to nearly triple capacity to 890,000 barrels per day (bpd), a 14% increase from current total Canadian capacity.
Close
The US, Britain, and European Union are delivering vaccines, setting up a scenario where some parts of the world reach herd immunity while others lag, hurting poorer economies.(AP)
The US, Britain, and European Union are delivering vaccines, setting up a scenario where some parts of the world reach herd immunity while others lag, hurting poorer economies.(AP)

World’s economic recovery gets delayed by slow vaccine rollouts

Bloomberg
PUBLISHED ON JAN 24, 2021 06:12 PM IST
  • Double-dip recessions are now expected in Japan, the euro area and UK as restrictions to curb the virus’s spread are enforced. Record cases in the US are dragging on retail spending and hiring, prompting President Joe Biden’s new administration to seek an extra $1.9 trillion fiscal stimulus.
Close
The Antony Waste Handling Cell IPO consists of a fresh issue of <span class='webrupee'>₹</span>85 crore worth of shares and an offer for sale of 68,24,933 equity shares by existing shareholders.(iStock)
The Antony Waste Handling Cell IPO consists of a fresh issue of 85 crore worth of shares and an offer for sale of 68,24,933 equity shares by existing shareholders.(iStock)

India sees 19 IPOs worth USD 1.84 billion in 2020 December quarter

PTI, New Delhi
PUBLISHED ON JAN 24, 2021 06:01 PM IST
Leading consultancy EY's India IPO Trends Report: Q4 2020 showed that there were a total of 10 Initial Public Offers (IPOs) in the main market and 9 in the SME (Small and Medium Enterprises) segment.
Close
The 'Special Assistance to States for capital expenditure' scheme was announced by the Centre in October last year as part of Aatmanirbhar Bharat package.(HT Photo)
The 'Special Assistance to States for capital expenditure' scheme was announced by the Centre in October last year as part of Aatmanirbhar Bharat package.(HT Photo)

FM allocates 660 crore additional funds to MP for citizen-centric reforms

PTI, New Delhi
PUBLISHED ON JAN 24, 2021 03:44 PM IST
"Fifty per cent of the approved amount has also been released to the state as first installment for the approved projects," the finance ministry said in a statement.
Close
The <span class='webrupee'>₹</span>40,000-crore NIIF was set up in December 2015 as an institution for enhancing infrastructure financing by investing in greenfield (new), brownfield (existing) and stalled projects.(AFP)
The 40,000-crore NIIF was set up in December 2015 as an institution for enhancing infrastructure financing by investing in greenfield (new), brownfield (existing) and stalled projects.(AFP)

NIIF makes equity investment of less than 5,000 cr in 5 yrs

PTI, New Delhi
PUBLISHED ON JAN 24, 2021 02:30 PM IST
  • According to sources, NIIF has made an equity investment of 4,689 crore, while the co-investment by its partners stood at about 7,053 crore at the end of September 2020. The quasi-sovereign wealth fund's total equity investment along with partners stood at 11,742 crore as of September 2020.
Close
Stove Kraft is the fourth company to open an IPO this month after Indian Railway Finance Corporation (IRFC), Indigo Paints and Home First Finance Company.(AP/ Representational)
Stove Kraft is the fourth company to open an IPO this month after Indian Railway Finance Corporation (IRFC), Indigo Paints and Home First Finance Company.(AP/ Representational)

Stove Kraft IPO to open tomorrow: What you need to know

By hindustantimes.com | Written by Meenakshi Ray, New Delhi
PUBLISHED ON JAN 24, 2021 02:27 PM IST
Stove Kraft has fixed a price band of 384-385 a share for its initial public offer and it is expected to fetch 412.62 crore at the upper end of the price band.
Close
A healthcare worker draws a dose of the Moderna Covid-19 vaccine from a vial at a free drive-through coronavirus disease (Covid-19) vaccine clinic.(Reuters Photo )
A healthcare worker draws a dose of the Moderna Covid-19 vaccine from a vial at a free drive-through coronavirus disease (Covid-19) vaccine clinic.(Reuters Photo )

Leaders of Covid-19 vaccine rollout deliver world-beating market gains

Bloomberg
PUBLISHED ON JAN 24, 2021 01:10 PM IST
Traders are rushing to price the global vaccine rollout and betting nations at the forefront will be the fastest to recover from the crisis, lifting their stocks, currencies and bond yields.
Close
The image shows a diamond which will be sold at Sotheby’s in Hong Kong.(Reuters)
The image shows a diamond which will be sold at Sotheby’s in Hong Kong.(Reuters)

Diamond trade is roaring back thanks to stuck-at-home shoppers

Bloomberg
PUBLISHED ON JAN 24, 2021 01:02 PM IST
The boom is being driven by bumper holiday jewelry sales, particularly in the vital US and Chinese markets.
Close
Few of the emerging markets that have started receiving positive FPIs flows this month to date are: Indonesia ($800 million), South Korea ($320 million), Taiwan ($2.3 billion) and Thailand ($113 million). (File Photo (Representative Image))
Few of the emerging markets that have started receiving positive FPIs flows this month to date are: Indonesia ($800 million), South Korea ($320 million), Taiwan ($2.3 billion) and Thailand ($113 million). (File Photo (Representative Image))

FPIs remain net buyers at 18,456 crore in January so far

PTI
PUBLISHED ON JAN 24, 2021 12:25 PM IST
According to depositories data, overseas investors pumped in 24,469 crore into equities but pulled out 6,013 crore from the bonds market between January 1-22.
Close
The BSE benchmark scaled the 50,000-mark for the first time on Thursday.(HT Photos)
The BSE benchmark scaled the 50,000-mark for the first time on Thursday.(HT Photos)

Mcap of 4 of top-10 valued firms jumps over 1.15 lakh crore; RIL biggest

PTI
PUBLISHED ON JAN 24, 2021 11:08 AM IST
The valuation of Reliance Industries Limited jumped 71,033.44 crore to reach 12,99,363.47 crore, becoming the biggest gainer.
Close
The BSE Sensex scaled the 50,000-mark for the first time on Thursday.(PTI)
The BSE Sensex scaled the 50,000-mark for the first time on Thursday.(PTI)

Markets may remain volatile in holiday-shortened week: Analysts

PTI
PUBLISHED ON JAN 24, 2021 11:03 AM IST
Among major earnings to focus on this week are from UCO Bank, Axis Bank, Bank of Baroda, Canara Bank, Hindustan Unilever Limited, Lupin, Maruti Suzuki India and Tata Motors.
Close
Mukesh Ambani, chairman and managing director, Reliance Industries Ltdmint(Mint File Photo )
Mukesh Ambani, chairman and managing director, Reliance Industries Ltdmint(Mint File Photo )

Mukesh Ambani is world’s 11th richest billionaire. Check who else is on the list

By hindustantimes.com | Edited by Kanishka Sarkar, Hindustan Times, New Delhi
PUBLISHED ON JAN 24, 2021 07:27 AM IST
Mukesh Ambani's bet on consumer services -- telecom and retail -- seems to be paying off despite the pandemic
Close
Gadkari said last year that the policy would also help recycle key raw material made available by scrapping vehicles, such as steel, aluminium and plastic, thereby lowering automobile prices.(PTI)
Gadkari said last year that the policy would also help recycle key raw material made available by scrapping vehicles, such as steel, aluminium and plastic, thereby lowering automobile prices.(PTI)

Fee waiver, road tax discount key features of Centre’s draft scrappage policy

By HT Correspondent, New Delhi
PUBLISHED ON JAN 24, 2021 05:17 AM IST
Features of the draft policy, one of whose caveats is that the vehicles that are sent to the scrapyard must be dismantled in an environment friendly way, were discussed by the ministry at the 40th meeting of the transport development council chaired by Union transport minister Nitin Gadkari on Tuesday.
Close
A new trade agreement between the allies is a higher priority for Johnson than it is for Biden.(Reuters)
A new trade agreement between the allies is a higher priority for Johnson than it is for Biden.(Reuters)

UK PM Boris Johnson presses US Prez Joe Biden for new trade deal

AP, Washington
PUBLISHED ON JAN 24, 2021 05:01 AM IST
The push for a new deal came in a broad-ranging call between the two leaders that touched on the global response to the coronavirus pandemic as well as the Biden administration announcing this week that the U.S. would rejoin the Paris climate accord and the World Health Organization, according to a statement from Downing Street.
Close
India has allowed local airlines to fly limited schedules since May after two months of a strict nationwide lockdown, gradually opening up the domestic market.(PTI)
India has allowed local airlines to fly limited schedules since May after two months of a strict nationwide lockdown, gradually opening up the domestic market.(PTI)

India’s domestic aviation operations nearing pre-pandemic levels

Bloomberg
UPDATED ON JAN 23, 2021 10:54 PM IST
As many as 257,613 passengers flew locally as on Jan. 22, compared with 30,000 passengers that traveled by air when such flights were restarted on May 25, Puri said in a Twitter post on Saturday.
Close
SHARE
Story Saved
OPEN APP