IL&FS cash crunch: Which banks have biggest exposures to group?
Any further weakness in the group’s financials may have a bearing on many state-run banks such as PNB, Bank of Bank of Baroda and Union Bank, whose advances to the group comprise 50-100 basis points of their total loan books.
SBI and private lenders such as Axis Bank and YES Bank have negligible exposure to these companies.
ICRA last week downgraded the company's debt by at least nine notches, citing cash crunch. The agency cut the rating on IL&FS’ Rs 5,225 crore non-convertible debentures and Rs 350 crore loans sharply to BB from AA+, a second downgrade after the rating was earlier cut from AAA to AA+ on August 7.
Following suit, India Ratings on Tuesday downgraded the NCDs of the infrastructure development company to ‘IND BB rating watch negative’ from ‘IND AA+ rating watch negative’ on Tuesday.
As many as 35 mutual fund schemes were hit by the Icra’s rating downgrade.
“Our interaction with banks suggests a good part of IL&FS Group would be sitting as standard assets for most banks, except for NPA recognition of a large power exposure of the group,” said Nomura India.
The brokerage does not have enough information to access the loss given default (LGD) in exposures, but believes the slippage risk remains high after the recent rating downgrades.
The group has systemic borrowings of nearly Rs 91,000 crore. Out of this, it has raised Rs 57,000 crore through bank loans.
(Image figures in Rs million)
PSU banks hold 70 per cent of the debt, private banks hold less than 10 per cent and large institutions such as LIC and foreign banks hold the rest.
“Our MCA-based analysis of bank wise-exposure (Rs 35,000 crore of the Rs 57,000 crore of bank debt) indicates retail banks and ICICI Bank have negligible exposure, and SBI, Axis Bank and YES Bank’s exposure is just 10-25 bps of loans. Within our coverage universe, PNB, BoB and Union Bank have relatively higher exposure, equivalent to 50-100 bps of their FY18 loan book,” Nomura India said in a note.
IL&FS Transport Network, the holding company of the group’s road assets, has nearly Rs 35,000 crore consolidated debt. Financial positions of this firm remain weak with interest costs forming 90 per cent of Ebitda.
IL&FS Financial Services has Rs 17,000 crore of debt, which sits as standard asset for most banks, Nomura India said.
Here are top shareholder of IL&FS: