Axis Bank Future Plans

Topics: ICICI Bank, Loan, Debt Pages: 6 (1961 words) Published: March 20, 2013
Axis Bank plans VRS to cut flab at top
Anita Bhoir, ET Bureau Dec 12, 2012, 06.00AM IST

(The bank plans to roll out…)
MUMBAI: Three years after Shikha Sharma took the corner room at Axis Bank, the country's third-largest private sector lender is making another attempt to cut flab. The bank plans to roll out an early retirement scheme for senior employees aged 40 or more, who have been with the lender for 10 years or longer.

This is the bank's second attempt to trim its 31,000-strong workforce since 2009. The first attempt had received a lukewarm response, and this time the private sector lender has tailored the scheme to target people who may be good performers but don't have the ability to make it big. "This time, the scheme seems to be more targeted and we hope executives will prefer to accept it rather than be fired at a later date on the pretext of non-performance," said an Axis Bank official, who requested anonymity. "The management wants to reduce the number of vice-presidents and senior vice-presidents. It wants a leaner and younger organisation," the official added. Axis Bank is not the first private institution to offer an early retirement scheme. In its earlier avatar as a financial institution, ICICI had introduced its first VRS in 1996-97. The second scheme came in late-1999. Later, in 2003, the KV Kamath-led ICICI Bank announced an early retirement offer targeted at erstwhile employees of ICICI and Bank of Madura. Shikha Sharma, who headed ICICI Prudential before taking up the reins at Axis Bank, seems to be following the ICICI management style in her new job. Axis has 31,738 employees. Its staff cost was 577.90 crore at the end of September 2012, compared with 498.62 crore in the year-ago period. "The bank may face immediate financial burden as it would have to make lump sum payments to employees. However, over a period it would led to cost savings," said Kajal Gandhi, an analyst with ICICI Securities.

Axis Bank plans Rs 6000 crores share sale to meet Basel III norms ET Bureau Dec 18, 2012, 08.06AM IST
MUMBAI: Axis Bank, the country's third-largest private bank, is looking to sell as many as 4.58 crore new shares to boost its capital before the Basel-III norms kick in, which at current prices may help it fetch more than Rs 6,000 crore. The lender, headed by Shikha Sharma, will be the second private sector bank to raise funds this year after IndusInd Bank. City Union Bank's rights share sale is underway whileYES Bank and Development Credit Bank are also in the process of raising equity.

ICICI Bank and HDFC Bank may also reach out to investors in the coming months for funds as the market for equity issuances opens up and the need to raise funds increases to meet capital norms. "The capital raising is largely to fund growth and also to meet Basel-III norms," said Kajal Gandhi, analyst ICICI Securities. "Other private sector banks like YES Bank and IndusInd Bank have also raised funds recently." The equity issuance by Axis will lead to a 10.75 per cent dilution. Axis said its board has approved the fund-raising plan, which will either be a domestic sale to institutions or a GDR issue. It also retains the right to sell to existing holders. Indian lenders are raising capital as loan growth is seen picking up next year after more than a year of sluggish demand. With the government proceeding with some reforms, investment demand may accelerate and banks will need to keep a higher capital buffer. RBI's plan to implement the Basel-III norms to prevent a repeat of the 2008 financial crisis mandates banks to keep higher capital. It will be implemented in phases over six years. Axis Bank's tier-I capital, or equity capital, is at 8.99 per cent, compared with 7 per cent prescribed by Basel-III norms....
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