Have declared Kingfisher Airlines account as NPA: UCO Bank

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Have declared Kingfisher Airlines account as NPA: UCO Bank

UCO Bank is part of the consortium of lenders to Kingfisher Airlines (KFA). In an interview to CNBC-TV18, Arun Kaul, chairman says, the bank has declared KFA account as a non-performing asset (NPA).

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UCO Bank is part of the consortium of lenders to Kingfisher Airlines (KFA). In an interview to CNBC-TV18, Arun Kaul, chairman says, the bank has declared KFA account as a non-performing asset (NPA). "We would like this account to be regularised, if any further request is to be entertained," he adds.

Below is the edited transcript of his interview with CNBC-TV18's Mitali Mukherjee and Sonia Shenoy. Also watch the accompanying video.

Q: What has transpired through the course of the last 48 hours? Has any decision been made in order to even provide interim lines of credit to Kingfisher Airlines or have all banks agreed to the fact that they will not extend any lines of credit yet?

A: There is no decision as yet. But we have declared it an NPA. We would like that account to be regularised.

Q: Since yesterday there was news that a couple of banks had come together and decided to provide at least some kind of working capital to Kingfisher Airlines. You are confirming that the lenders have not reached any such decision pending the meeting that is scheduled next week.

A: We are not aware of any such decision.

Q: Can you tell us about the preferential issue that you have done to LIC? What is the total fund raising that will be done? What will it take the total tier-I capital to?

A: We are planning to issue 3.137 crore equity share of Rs 10 each to LIC. That will constitute 5% of pre issued paid up capital for the bank. The issue price in terms of SEBI guidelines comes to Rs 82.49. The quantum of the issue will be Rs 258 crore. As on December 31, 2011, our capital adequacy was 12.33% with tier-I at 7.79%. With this increase in the capital, we should see our capital adequacy tier-I moving above 8% and overall capital adequacy about 12%.

Q: How much does LIC's holding increase in the bank? Is there more leg room to raise further stake now by LIC?

A: As on date, LIC's holding in UCO Bank is 8.43%. Post preferential issuance, the holding could be 12.79%.

Q: Which way are the banks leaning in terms of how to deal with this Kingfisher issue? Yesterday, we were speaking with State Bank of India who confirmed that any fresh credit or capital being provided to the company would again get treated as NPA. UCO Bank itself is still working at net NPA of above 2%. Are you comfortable with providing any fresh capital to that company?

A: Earlier, we had classified this account as an NPA account. This account needs to be regularised and the viability of the project has to be established with the bankers. So, I am not able to comment at all about this at this stage.

Q: Could you share with us atleast the thoughts of the consortium of bankers in terms of what the promoters themselves can do to step into this situation and alleviate both the debt and working capital strife that the company is facing?

A: Whatever promoter has said is already known to the market. So, bankers have not taken any view on this as yet.

Q: The reason why we are probing so much into this is because of the fact that asset quality issues have persisted for banks, not such as your own but for many others for a while now. Are you at all planning to extend any fresh loans to Kingfisher Airlines or will you wait for them to clear your dues?

A: As I said it's NPA with us, we would like this account to be regularised, if any further request is to be entertained. So, yes, asset quality is a concern for us. We are trying to improve the bank balance sheet. We are trying to improve the quality of assets. So I would not like to comment about a specific asset at this stage, but suffice to say that we have declared it as an NPA.

Q: Would UCO Bank require raising any other capital? Would you look at any equity route in order to do that or do you have sufficient money coming through with this preferential issue to LIC?

A: This preferential issue should see our tier-I capital crossing 8%. However, we have put in a request to the government also for additional allotment which we are yet to hear from them.