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Indian banks gearing up to scale up foreign operations

Mumbai, July 06: Eyeing the fast-growing NRI and corporate financing business overseas, a host of Indian banking majors including the largest lender, State Bank, are planning to enhance their overseas presence this fiscal.

State Bank, which recently received the Singapore monetary authority's nod to set up 25 branches, is on the final stages of setting up offices.

SBI is planning to set up three branches in the initial phase and would focus more on NRI remittence and corporate lending business amongst other services, SBI's chief general manager, T C A Ranganathan, said.

"We are presently engaged in the site-selection process to set up the new offices and the branches are expected to get operational in the coming few months," Ranganathan said. SBI presently has 84 foreign offices in 32 countries.

Leading private-sector lender, HDFC bank, also plans to ramp up its overseas operations. The bank has received all necessary regulatory approvals to set up a branch in Bahrain.

"The Bahrain branch is ready to function and we expect it to be operational by August. We are planning many new offices this fiscal," an HDFC official said.

The lender is understood to have plans to set up a branch in Hong Kong and a representative office in Kenya, he said. HDFC bank already have representative offices in Dubai and Toronto.

Country's largest private sector lender, ICICI bank have plans to open four new offices in US, which would come up in California, New Jersey, Texas and Illinos.

ICICI bank is present in 18 countries and had forayed into US by setting up an office in New York.

Many Indian banks, both in the private and public sector, are now increasingly expanding their operations to overseas locations with a view to garner more revenues.

Similarly, banks are also seeing high business potential in lending to small and medium-sized corporates by issuing credit linked notes (CLNS) and the like on behalf of Indian corporates.

Leading state-owned lenders like Punjab National Bank (PNB), Bank of Baroda and bank of India have also chalked out plans to scale-up their overseas presence.

While PNB plans to set up branches in Shanghai and Norway, a subsidiary in Canada and a representative office in Singapore this fiscal, the lender also plans to upgrade its existing REPO office in Dubai, PNBS executive director, J M Garg said.

Leading state-owned lenders, BOB and BOI have also announced their plans to set up ten overseas offices each this fiscal.

BOI has scheduled its foray to countries such as Cairo, Australia, New Zealand, Cambodia and Vietnam and will also open a REPO office in Dubai.

"As the bank is growing its size, there is a need for a strong international presence. We expect to open around 10 new branches this fiscal. Dubai representative office is expected to come up in 15-20 days, its executive director, K R Kamath said.

Besides, the lender has also started the process to set up a subsidiary in Canada, he said.

"Overseas operations presently contribute 20 percent to our business and 18 percent to the bank's profits. We are looking at to substantially enhancing the revenue from foreign operations in the period ahead," Kamath said.

We will go to IAEA soon, not afraid of facing Parliament: PM

New Delhi, July 07: In response to the perpetually nagging ally, the Left’s ultimatum to withdraw support from the government, an exasperated, yet very poised and confident PM Manmohan Singh on Monday finally reiterated his government’s commitment to go to the IAEA saying that he was not afraid of facing the Parliament for the trial of strength.

“I live with tension as it is part of a PM’s job yet I am not worried as we are equipped to deal with numbers,” he said.

On signing of the nuke agreement with the US, he said that he would discuss the nuclear deal with President George Bush at the G-8 summit. ”I don’t expect the decision to sign the safeguards to be a problem”, he added.

Exuding confidence at the strength of his government, he said “there would be no early Lok Sabha polls.”

Earlier in the day speaking to media persons, Forward Block chief Debrata Biswas had said that the Left would formally withdraw its support from the government on the 10th of July. The Left proposed to hand over a letter to the President expressing its intent.

The date was chosen as the Prime Minister is scheduled to return from the G8 summit on the 9th of July. The UPA and Left leaders are to meet on the 10th of July.

Kotak warns India Inc against exuberance in foreign takeovers

London, July 07: Indian private sector lender Kotak Mahindra Bank's managing director Uday Kotak, one of the top bankers in the country, has warned against the "exuberance" in overseas acquisitions by the domestic companies at a time when global financial markets are in a turmoil.

"The Indian system, government and business, to a certain extent did fall prey to exuberance which is now getting seriously affected," Kotak told British daily Financial Times in a report published here.

While noting few top persons have dared to question the ambitions of the country's MNCs, the daily quoted Kotak as saying that he was worried about corporate India's over-reach amid a period of global financial turmoil.

Indian companies announced an estimated 240 outbound M&A deals in 2007 worth more than USD 32 billion, up from less than 200 deals worth less than USD 10 billion in 2006 and not even USD 5 billion in 2005.

In comparison, there were just about 100 inbound M&A deals worth about USD 15 billion in 2007, up from such deals worth about USD 5 billion each in 2006 and 2005.

While the experts expect the total M&A volume to decline in 2008 in the midst of sluggish global market trends, still there have been a number of high-profile deals, totaling close to USD 10 billion, so far this year.

The FT report quoted Kotak as saying that the Tata-Corus deal worked out better than expected for the Indian buyer.

However, he indicated that the USD six-billion takeover of Canadian aluminium maker Novellis by Birla group's Hindalco had yet to prove to be a success, the report added.

Kotak also termed Tata Motors' USD 2.3-billion acquisition of jaguar and land rover brands from ford as "a bold move".

IT cos projected to register 11% jump in Q1 FY`09 revenues

New Delhi, July 07: Amid global financial turmoil, most Indian IT companies led by Infosys and TCS are expected to post sequential revenue growth in 6-11 percent range due to a depreciating rupee in the first quarter of this fiscal.

In the rupee terms, the top lines of frontline tech stocks are projected to grow in the range of 6.5 per cent to 11.1 percent sequentially in the first quarter.

"The growth in the top lines is primarily driven by a volume growth of 1-2 percent, boosted 7 percent depreciation in the rupee against the US dollar during the quarter. In dollar terms, the sequential growth is expected to remain muted during the quarter," brokerage firm Sharekhan said in a recent report.

Rupee has been sliding against the dollar since the start of April and at present has an exchange rate of about 43.

Sharekhan in its research note said the average exchange rate of Rs 42.8 against the dollar is also above the assumption of rs 40 made by the domestic companies (Infosys assumed Rs 40.02 per dollar and Satyam computer services Rs 40 a dollar).

As of June 30, rupee stood at 42.84 against the greenback compared to 39.9 on March 31. On a quarterly basis, the rupee has depreciated nearly 4.5 percent.

"Such a high depreciation in the quarter is likely to have a positive impact on the margins of the companies," Sharekhan added.

In a research note on the it industry, Emkay Global Financial Services said sequential revenue growth for companies in the sector would be in the range of 1-5 percent, fueled by rupee depreciation.

Icahn says Microsoft still interested in *****
Monday July 7, 9:42 am ET

NEW YORK - Financier Carl Icahn quoted Microsoft Corp (NasdaqGS:MSFT - News) CEO Steve Ballmer as saying Microsoft would be willing to reopen talks to buy all or part of ***** Inc (NasdaqGS:YHOO - News) if a new board were elected at *****'s August shareholder meeting.
In an open letter to ***** shareholders on Monday, Icahn said had spoken frequently to Ballmer over the past week.

He said Ballmer would still be interested in buying *****'s "search" function, or buying the whole company, but would not negotiate with the existing board.

Icahn, a major ***** shareholder, is running a slate of dissident nominees to its board.

(Reporting by Dane Hamilton; editing by John Wallace)

Oil below $142 on dollar gain, Iran in view
Monday July 7, 11:10 am


LONDON - Oil retreated to below $142 a barrel on Monday as the dollar gained, taking a pause from a record-breaking rally that has lifted prices by almost 50 percent this year.
Investors were also eyeing signals from Iran, the world's fourth-largest oil exporter, in its dispute with the West over its nuclear work, and some saw signs that Iran may be more flexible in negotiations.

"It's mainly the stronger dollar," said Nauman Barakat, senior vice president at Macquarie Futures USA, of oil's drop. "We might see further correction all the way down to the $140 area."

U.S. crude traded at $141.43 a barrel by 1440 GMT (10:40 a.m. EDT), below Friday's intra-day low of $143.22. Brent crude fell $2.12 to $142.30.

The New York Mercantile Exchange did not issue an official Friday closing price due to the July 4 holiday.

On Monday, the dollar reached a one-week high against a basket of major currencies, benefiting from a European Central Bank tone that has reduced expectations of further interest rate rises.

Strength in the U.S. dollar can reduce the appeal of oil and other commodities to investors as a hedge against inflation.

MIXED SIGNALS

Oil in New York hit a record $145.85 on Thursday, but later eased as traders anticipated lessening tensions between Iran and the West after Tehran responded to a package of incentives to try to resolve the dispute.

But Iranian President Mahmoud Ahmadinejad said on Monday Iran would not abandon its right to enrich uranium and rejected a major powers' demand to do so as "illegitimate," the official IRNA news agency reported.

Tehran's foreign minister on Sunday expressed optimism about what he said was a "new environment" for talks.

"Iran shows signs of improved lines of communication," said Barclays Capital in a report.

Oil has gained almost 50 percent this year, driven partly by tension over Iran's nuclear program and expectations that global supply will fail to keep pace with demand from fast growing Asian economies such as China.

The rally has led to fuel protests worldwide and begun to dampen demand in some consumer nations, including the United States, the world's biggest energy user. World leaders are concerned prices could move even higher.

Leaders of the Group of Eight nations gathering for a summit in Japan fear further rises, Italian Prime Minister Silvio Berlusconi said.

"There are fears oil prices could increase further. Some people fear they could reach $200," Berlusconi told reporters on the sidelines of the summit.

Stocks fall on worries about financial sector
Monday July 7, 5:39 pm

Stock market declines on worries about financial sector even as oil prices pull back sharply

NEW YORK -- Wall Street lost more ground in extremely volatile trading Monday, as investors recoiled at a cautious economic outlook from a Federal Reserve official and the possibility of more financial troubles of Fannie Mae and Freddie Mac.
The market found only slight solace in retreating oil prices.

San Francisco Federal Reserve President Janet Yellen said in a speech the financial markets remained fragile, and that it will take time for conditions to improve. "My expectation is that market functioning will improve markedly by 2009," she said. "But things could get worse before they get better."

The comments added to concerns raised in a note by Lehman Brothers analysts that Fannie and Freddie may need to raise more capital as the credit crisis continues. Worries about the ailing financial sector deflated a stock rally early in the day that had been fueled by a $4-a-barrel pullback in oil prices.

The market managed, however, to rebound from its lows of the day, when the Dow Jones industrial average sank to its worst level since mid-August of 2006. Some investors bought back into the market to take advantage of the low prices.

"The market is so skittish and so scared that half the people believe that this is just another leg of the down market and the other half believes that we're forming a bottom," said Frank Ingarra, assistant portfolio manager at Hennessy Funds.

The Dow fell 56.58, or 0.50 percent, to 11,231.96. Over the course of the day, the blue chips rallied, tumbled, rebounded, and then fell once more. The Dow fell as much as 167.80 to 11,120.74 -- its lowest trading level since Aug. 15, 2006 -- but was also up more than 100 in early trading.

Broader stock indicators also declined. The Standard & Poor's 500 index fell 10.59, or 0.84 percent, to 1,252.31, and the Nasdaq composite index fell 2.06, or 0.09 percent, to 2,243.32.

The technology-dominated Nasdaq got a modest boost from ***** Inc., which rose $2.56, or 12 percent, to $23.91 after Microsoft Corp. expressed support for investor Carl Icahn's effort to oust *****'s board next month. Microsoft said a successful rebellion would encourage it to renew its takeover bid for *****, or negotiate another deal.

Light, sweet crude fell $3.92 to close at $141.37 a barrel on the New York Mercantile Exchange, after falling by more than $5 a barrel at times.

The retreat did little to assuage fears about high energy prices, however. Wall Street, which has been hurtling stocks lower for the past few weeks, remains fearful that consumers are trimming their spending to pay for gasoline. With consumer spending accounting for more than two-thirds of U.S. economic activity, a pullback could create big ripples.

Government bonds rose. The 10-year Treasury note's yield, which moves opposite its price, fell to 3.91 percent from 3.98 percent last Thursday.

Volatility on Wall Street, as measured by the Chicago Board Options Exchange's volatility index, on Monday briefly hit its highest point since March, when worries about the financial markets peaked during the buyout of Bear Stearns Cos.

"It indicates that there was more fear entering the market than there had been in previous weeks," said Todd Salamone, director of trading and vice president of research at Schaeffer's Investment Research.

Fannie Mae fell $3.04, or 16.2 percent, to $15.74 and Freddie Mac fell $2.59, or 17.9 percent, to $11.91, after Lehman Brothers analysts said new accounting rules could require Fannie to raise $46 billion more capital and Freddie to raise $29 billion.

Citigroup Inc., JPMorgan Chase & Co., and Bank of America Corp. also saw their shares fall ahead of their earnings reports later this month. Citi fell 42 cents, or 2.5 percent, to $16.40; JPMorgan dropped $1.27, or 3.6 percent, to $34.04; and Bank of America fell 87 cents, or 3.9 percent to $21.53.

In addition to financials, Merck & Co. dragged on the Dow, falling $1.85, or 4.8 percent, to $36.60. A UBS analyst downgraded the drug maker, citing slowing sales of its HPV treatment Gardasil.

Meanwhile, General Motors Corp. is considering cutting more white-collar jobs and getting rid of some brands, according to a person familiar the company's discussions. The person asked not to be identified because no decisions have been made. GM shares, which recently sank to all-time lows, rose 12 cents to $10.24.

Investors haven't been as optimistic lately about the prospects for an economic recovery in the second half of 2008 as they once were. The Dow has fallen the last three weeks while the S&P 500 index and the Nasdaq have logged five straight weeks of declines. With drops of more than 20 percent from their October highs, the Dow and the S&P 500 entered bear market territory last week as rising oil stirred inflation concerns.

Scott Fullman, director of derivatives investment strategy for WJB Capital Group in New York, said some negative technical indicators on Thursday presaged the market's weakness Monday. Notably, there were no companies that set 52-week highs on the New York Stock Exchange on Thursday, Fullman said. "It's unusual to see a drop-off like that."

On Monday, the dollar traded mixed against other major currencies, while gold prices fell.

Declining issues outnumbered advancers by more than 2 to 1 on the New York Stock Exchange. Consolidated volume came to 5.21 billion shares, up from 3.19 billion shares on Thursday.

The Russell 2000 index of smaller companies fell 7.52, or 1.13 percent, to 658.26.

Overseas, Japan's Nikkei stock average rose 0.92 percent. Britain's FTSE 100 rose 1.85 percent, Germany's DAX index rose 1.97 percent and France's CAC-40 advanced 1.80 percent.

Spot gold watching G8 comments
8 Jul 2008 10:27 am

Singapore - Gold is watching for G8 comments while oil, forex and stock markets are unsettled, says Kitco analyst Jon Nadler Tuesday. "Tread with care, as gold might yet visit the USD900-USD910/oz value zone," Nadler says.

Oil, geopolitics, dollar policy, inflation, global economy and surprise events are pulling gold in different directions. He advises to watch direction on oil, maybe grain and soft commodity prices, given G8 comment on need to take "immediate action" against stratospheric prices of oil and food. But G8 influence limited to only making appeals to countries that are major producers.

Spot gold last traded at USD925.60, down 50 cents against New York close.

N-Deal: Left to decide on withdrawal of support to UPA govt


New Delhi, July 08: The Left parties are due to meet on Tuesday to decide on the withdrawal of support to the UPA government. The crucial meet comes a day after Prime Minister Manmohan Singh said his government will to the IAEA soon to finalise the safeguards agreement required for the Indo-US nuclear deal.

The Left has given ample hints since PM’s statement that it will take a decision in favour of withdrawing support when it meets at 11:30 am today. CPI(M) general secretary Prakash Karat said this morning that the PM’s statement is a de facto assertion that the government has decided to go ahead with the nuke deal, which they are opposed to. Karat’s statement came hours before he meets other Left leaders to decide on the withdrawal of support.

Karat caustically remarked that the Prime Minister could have communicated his decision to go ahead with the deal to the Left parties rather than announce it outside the country.

The Left parties are also expected to reply to External Affairs Minister Pranab Mukherjee’s letter in which he had asked yesterday for one more meeting of the Left-UPA co-ordination committee on July 10.

Dr Singh said yesterday that India will "very soon" approach the IAEA for a safeguards agreement for the controversial Indo-US nuclear deal where the "process will move very fast".

Reacting to the PM’s statement, Forward Bloc leader Debabrata Biswas had yesterday said that the Left parties would withdraw support to the UPA government on July 10, the day when a meeting of the UPA-Left committee had been convened.

While Karat declined to comment on the PM’s statement yesterday, CPI national secretary D Raja had said that Pranab Mukherjee's suggestion for a UPA-Left meeting and the PM’s statements were "contradictory".

"The Prime Minister has put Mukherjee and the UPA-Left panel in a ridiculous position. The (UPA-Left) meeting has become meaningless now. Mukherjee should explain why he invited the Left parties for the meeting to finalise the committee's findings if the government has already decided to move the IAEA. The Prime Minister should have some respect for the Committee," Raja said.

On Singh's statement that he was ready to face Parliament for a trial of strength, Raja said, "If PM thinks he can manipulate the numbers, let him prove it on the floor of the House. What sort of ethics is he trying to project?"

Asked to comment on Singh's statements on his way to the G-8 Summit, Karat told a news agency, "We will reply to (Mukherjee's) letter tomorrow (Tuesday) and decide our future course of action."

The Samajwadi Party is also meeting today to chart its future course of action. It had formally announced yesterday that it would back the UPA over the N-deal.

RCom, RIL shares plunge over 4%

Mumbai, July 08: Shares of Reliance Communications and Mukesh Ambani-led Reliance Industries on Tuesday plunged over four percent in the early morning trade amid exclusive discussion between the ADA Group firm and South African telecom entity MTN coming to an end on Tuesday.

Shares of Anil Ambani-led Reliance Communications today dropped 5.89 percent from yesterday's close of Rs 419.80 to touch an intra-day low of Rs 395.05. The scrip opened at Rs 410 and touched a high of Rs 414.70. It was later trading at Rs 412.65, down Rs 7.15 from previous close.

Meanwhile, shares of Reliance Industries today dropped 4.34 percent from yesterday's close of Rs 2,028.15 to touch a low of Rs 1,940.10.

The scrip opened at Rs 2,000, which was also its day's high. It was later trading at Rs 1,953.50, down Rs 74.65 from last close.

Earlier on May 26, RCom had announced the start of 45-day exclusive negotiations for a possible deal with MTN.