January 3rdst 2011

Fee squeeze seen in 2011- with Owais Patanwala

The Financial Express (clip attached)

Fees for underwriting stock sales in India may remain near all-time lows as investment banks

battle for market share, according to an executive at Citigroup Inc, the top-ranked adviser on

equity offerings in the country. “On the top end of the deal pyramid, there is serious competition,

” Ravi Kapoor, head of Citigroup’s global banking operations in India, said in a interview in Mumbai

recently. “We will still see sub-optimal fees being charged just to gain market share.”

Foreign banks sell retail portfolios to get back into shape

The Financial Express
Having stretched themselves during the good times in 2006-07 and 2007-08, several foreign banks

have spent the better part of the last two years dealing with retail loan delinquencies. N Rajashekaran,

country business manager, global consumer group, Citi India, said, “Retail banking is also about

reach and access and we are looking forward to RBI’s discussion paper on wholly-owned subsidiaries

for foreign banks in India which we hope will address the competitive disadvantages that we face in

terms of our geographical presence and our need to have more points of presence across the country.”

JPMorgan Chase, Deutsche Bank lead i-bank rankings

Mint
Deutsche Bank AG climbed four places to second spot in a ranking of deal makers in India in 2010,

which saw a spirited 75% leap in their combined revenue. Kotak Mahindra Bank Ltd retained its fifth

position on Dealogic’s list with revenue of $37.5 million, below Morgan Stanley and Citigroup Inc.,

making it the only home-bred investment bank in the top five.

Retail investors to help NSE grow volumes, market share

Financial Chronicle
A stock exchange can think of spreading (globally) only in terms of shareholdings. Citibank will operate

in India as Citibank, and will capture business of Indian banks.

 

RBI mulls ways for direct information flow from banks

The Indian Express
Amid a surge in bank scams including the recent Rs 400-crore Citibank fraud, the Reserve Bank of

India is considering putting in place a system that would allow it to directly monitor all transactions

at various banks.

HNI investments through Puri under Gurgaon police scanner

The Financial Express
In a move that could unearth a bigger trail of black money, the Gurgaon police is now investigating

investments made by around 20 high networth individuals (HNIs), apart from the Hero Group, who

invested in various schemes through Citibanks’s employee Shivraj Puri.

January 4th

Indemnity cover may protect

Business Standard
Thanks to its indemnity cover, Citibank may not have to provide for the alleged multi-crore fraud

by Shivraj Puri, the relationship manager at its Gurgaon branch. The bank has insured itself

against fraud or dishonesty by employees.

Top Hero official held for 250-cr fraud in Citi case

The Economic Times
Sanjay Gupta, a senior official of the Hero group, was arrested on Monday for allegedly investing

about 250 crore belonging to the promoters of group companies into a scheme that later turned

out to be fraudulent.
 

 January 5th

Citi M&A Head Sameer Nath On India Inc Deal Appetite & Trends - with Owais Patanwala

VCCirle.com
Sameer Nath talks about the M&A outlook for 2011, significant trends in 2010 and India's

deal-making appetite.

Tata Steel lines up $1-b global issue to reduce its Corus debt
The Economic Times
TATA Steel, India’s largest steelmaker by capacity, has started the process for an overseas

sale of shares to raise up to $1 billion, to reduce debt incurred in 2007 to acquire Corus.

JP Morgan, Citi, Standard Chartered, RBS, Kotak, HSBC are among the banks advising

Tata Steel on the GDR issue.

Police unravel Puri's dupe route

The Times of India
Shiv Raj Puri, the man behind the Rs 300-crore Citibank scam, had invested the money he had

collected from high net-worth individuals (HNIs) in Nifty.

Finance minister cautions against window dressing by accountants

The Economic Times
Finance minister Pranab Mukherjee has asked the country’s auditing fraternity to be vigilant against

‘window dressing’ of financials by companies, and highlighted the need for stringent disclosure norms

on complex financial instruments. The minister’s comments gain significance in the backdrop of the

recently-unearthed fraud at the Gurgaon branch of Citibank, involving diversion of depositors’ money

to the stock market.

 
To get to the bottom, cops in Gurgaon reach Citi's top in US
The Indian Express
In a move that surprised lawyers, bankers and the government, Gurgaon Police today registered an

FIR against Citibank NA, its global CEO Vikram Pandit, chairman William R Rhodes and nine other

officials in the Rs 300 crore alleged fake investments fraud.

January6th

Citibank fraud is no indication of regulatory failure: Montek

The Hindu Business Line
The Planning Commission does not see the Rs 300-crore Citibank fraud as a regulatory failure

even as it pointed out that frauds cannot be ruled out in any mechanism.

Sebi officials grill Citi fraud accused

The Economic Times
A string of developments unfolded in the Citibank fraud case on Wednesday, signalling that the plot

could thicken in the days to come.

Citi CEO won't be grilled: Cops

The Times of India
Citibank CEO Vikram Pandit and his colleagues will not be questioned in connection with the

Rs 300-crore scam in Gurgaon. Pandit and 10 other senior Citibank officials have been named in an

FIR filed by Sanjeev Aggarwal, the managing director of Helion, for duping him of Rs 32.43 crore.

Citibank fraud case: Hero sends 2 employees on leave

The Financial Express
Hero Corporate Services on Wednesday identified two more officers who may have colluded with the

expelled vice-president Sanjay Gupta in perpetrating the fraud in connivance with Shivraj Puri of

Citibank’s Gurgaon branch.

Is the worst over for bank stocks?

Mint
State Bank of India (SBI) and ICICI Bank Ltd welcomed the New Year by hiking lending rates

between a quarter and half percentage point, respectively. State Bank of India (SBI) and ICICI
Bank Ltd welcomed the New Year by hiking lending rates between a quarter and half percentage

point, respectively. Despite shrinking NIMs, banks are growing. Citigroup Inc. predicts a 23% growth

in December-quarter profit for its banks’ universe over a year ago.

IT majors tipped to post 4% profit jump in Dec quarter

The Hindu Business Line
Frontline Indian IT companies are expected to report a near four per cent increase in sequential net

profit for the quarter ended December 31 due to the continuing uptrend in discretionary IT spending.

Analysts are keenly awaiting management commentary on their clients' IT budgets for calendar 2011

to get a hang on the growth outlook for future quarters.“Also given the uncertainty in the macro, the

spending pattern of clients is more important than the budget in our view. Budgets are expected to

be flat to marginally up with the offshoring component increasing. The spend pattern will be a

function of the business environment,” a Citibank report said.

January 7th

Hindustan Times Correction

Sanjeev Aggarwal clarifies that the headline “Citi-fraud: Bank tried to bribe me, says customer”

that was published on January 6th, is misleading. (Please see attached clip)

Citibank fraud: Court extends Puri's remand by 6 days

The Economic Times
The Gurgaon city court on Thursday extended the police remand of the main accused Shivraj Puri

in the Citibank fraud case by six days. Puri was arrested last week in connection with the

Rs 400-crore fraud at a local branch here and was sent on police remand for a week.
 

NSE 'offers' to share details in Citi scam

The Hindu Business Line
The National Stock Exchange is said to have agreed to provide analytical data to SEBI and to

all other investigating agencies in the Citibank fraud case, according to sources.

Banks: Challenging environment

Business Standard
High credit growth is expected to drive banks’ core operational income (net interest income) in

the quarter ended December 2010, but rising deposit costs will lower interest spreads, say

analysts. A Citibank research report says the outlook for the sector remains positive in the

medium term, parallelling robust economic growth, and the correction provides an attractive

opportunity to invest in bank stocks with strong deposit franchises.

Dec quarter IT results to be better despite seasonal weakness

Business Standard
Despite being a seasonally slow quarter, the third quarter (October-December) numbers of Tier-I

information technology companies for 2010-11 are expected to log a volume growth in the range

of 5.5 to 7 per cent and revenue growth of 6 to 8 per cent (dollar terms), said analysts. ‘TCS

margins will see a decline of 100 bps in margins due to rupee appreciation and certain one-off

tax reversal benefits that the company had in Q2 (second quarter) of FY11,&’ said Citigroup

Global Markets' research.

 
January10th

Unravelling Shivraj Puri’s web

Mint-WSJ

Roughly three weeks before a first information report (FIR) was filed by Citibank NA against

Shivraj Puri, a relationship manager at its Gurgaon branch, in the Rs.400 crore fraud case

he is suspected to have masterminded, the bank smelt a rat.

Puri's clients versus Citi's customers

The Economic Times
SHIVRAJ Puri, the disgraced wealth manager, dealt with three kinds of clients. Some like the

Munjals who invested in his sham investment scheme with the money being parked in a Citibank

account. Some like Sanjeev Aggarwal had investment accounts with Citi, which had assigned Puri

as the relationship manager to help them invest their money. And, there is a third variety of customers

who neither have accounts with Citi nor was their money deposited in the custodian account that Puri

opened. These customers had directly transferred their money held in other banks to brokerages like

Bonanza and Religare. They did it because Puri asked them to do so. All of them want Citi to pay them

back. But even as it faces a hostile Press, Citi is unlikely to listen to all of them.

Companies to improve sales growth

Mint
Indian companies are expected to post impressive sales growth for the December quarter, reflecting

robust demand in the domestic economy, but increased raw material and interest costs are likely to

crimp profit margins at manufacturing firms. Acceleration in loan growth to 23% is expected to drive

margin growth of banks to 23%, a 4 January note by Manish Chowdhary and Aditya Narain of Citigroup

said.

Tata Steel plans Rs 7,000-cr FPO

The Financial Express
In what bears out the scramble among India's steel companies to add new capacities on a war-footing,
Tata Steel has drawn up plans to raise up to Rs 7,000 crore through a follow-on public offer (FPO) to

part-finance its expansion. The country’s third largest steel producer’s FPO comes close on the heels

of JSW Steel’s recent acquisition of Ispat Industries which made it a close competitor to public sector

SAIL for the slot of the country’s largest steelmaker. JPMorgan, Citi, Standard Chartered, RBS are

among the bankers advising the company on the prospective issue.

January 11th

More complaints emerge in Citi fraud

The Economic Times
More investors who claim to have lost money in the 400-crore fraud at Citibank’s Gurgaon

branch have surfaced, taking the total number of such entities to about 40, police sources

said. Most of the investors have approached the police and their complaints are likely to be

clubbed together for investigation, sources said.

Economists expect Dec inflation nos to be higher than anticipated

The Economic Times
Economists expect inflation to be higher than anticipated earlier. Two leading foreign banks

have revised their December forecast upward on concerns over rising food prices.

Tata Steel to begin roadshow for 5k-cr FPO on January 20

The Economic Times
Tata Steel is planning to start roadshows later this month for an equity offering that is

targeted to raise about . 5,000 crore to reduce debt and fund capacity expansions,

according to people familiar with the development.

Tata Steel may move to raise R4,500cr next week

Mint
India's largest steel maker could approach the mar- kets to raise `4,500 crore as early
as next week, four people familar with the transaction said.

High inflation spells trouble for corporate earnings

The Financial Express
With food inflation for the week to December 25, 2010 turning out to be a bit of a shocker at

18.32%, thanks mainly to the soaring prices of vegetables, it’s unlikely now that inflation will

moderate to levels of 5.5% by March as the central bank had projected. That could mean a

sharper rise in interest rates sooner than anticipated and the question now is whether the

Reserve Bank of India (RBI) may go so far as to opt for a 50 basis points hike in key policy

rates when it meets on January 25. The stock markets, which were jittery even last week,

with the benchmark Sensex giving up 4%, now seem to be bracing for a steep rise in interest

rates. And the bond markets are more nervous than ever with the yield on the benchmark

jumping to 8.2% on Monday, an eight-month high.

RIVERSDALE BID - Rio Tinto: will work closely with Tata Steel on Mozambique mine
Mint
Mining Ltd that it intends to work closely with Tata Steel Ltd to develop the Benga coal

project in Mozambique, which is a joint venture (JV) between the Indian and Australian firms.

 January 12th

Govt banks tread with caution after Citi scam

Business Standard
To ensure that their private banking businesses do not fall prey to frauds like the one allegedly

perpetrated by Citibank employee Shivraj Puri, public sector banks (PSBs) looking to enter the

wealth management space are moving cautiously.

 
Infosys losing margin edge as rivals catch up
The Economic Times
After years of commanding up to 15% better rates for outsourcing projects than domestic peers,

Infosys Technologies now sees its premium pricing erode, raising concerns about whether India’s

most profitable software company can sustain its high operating margins. Brokerage firms such

as Citi and Kotak expect the top three Indian software exporters to register 5-7% sequential

revenue growth. Investors forecast TCS and Infosys to post 27-28% and 31-33% operating margins,

respectively, for the quarter ending December. Infy margins may shrink to 32%

iGate seen pushing Patni's revenue growth to fast lane

Daily News & Analysis
Patni-iGate is a done deal—so now what's way ahead?
Analysts say the road ahead will have stretches of both smooth and rough rides for iGate, which

is trying to swallow a company 2.5 times its size. According to them, the transaction, which

has pushed the combined entity into the billion dollar league, will boost the revenue growth of

Patni as it acquires marketing muscle through a stronger sales force and a scale comparable

to its bigger rivals.” The interest burden will be significant given the size of the P&L," wrote

Citigroup analysts Surendra Goya and Vishal Agarwal in their report on Tuesday.

Tata Steel lines up FPO to retire debt

The Free Press Journal
Tata Steel plans to come out with a follow- on public offer for 5.7 crore shares, which might be

used to retire a substantial portion of the company's $ 10.7 billion debt liability. It did not

announce the dates for the proposed share sale issue. Media reports suggested that Tata

Steel has roped in seven banks as the BRLMs to the issue, including Deutsche Bank AG,

Royal Bank of Scotland Plc, Kotak Mahindra Capital Co Ltd, Standard Chartered Bank Plc

and Citigroup Global Markets India Pvt Ltd.

January 13th

 
RBI seeks wealth management details post Citibank scam
The Economic Times
The Reserve Bank of India (RBI) has asked select banks to share details of their wealth

management businesses following the 400-crore fraud perpetrated by a Citibank employee.

Police lens on co where Puri dad worked

The Times of India
Police will investigate records of Norman Martin Brokers, which employs Raghu Raj Puri,

the father of Shiv Raj Puri, the alleged mastermind of the scam.

Lower IIP numbers expected, but still a shock: Marketmen

The Hindu Business Line
The equity markets snapped its seven-day losing streak on Wednesday despite lower-than-expected

Index of Industrial Production (IIP) numbers. Market-men said that the latest IIP figures will add to the

woes of the Government which is already trying to curb high inflation. Citi India said that they expect

the IIP numbers to remain in the low single-digit range, especially next month as the December 2009

IIP numbers touched an all time high of 18 per cent.

Focus on RBI as growth slumps

Mint
Growth of factory output plunged to an 18-month low of 2.7% in November, triggering concerns about a

phase of slower industrial activity and resurgent inflation. Citigroup India economists Rohini Malkani

and Anushka Shah, in a research note, said they expect IIP to be in low single digits next month.

“While predicting this data is admittedly getting more and more difficult, given the high base effect,

we expect the numbers to remain in the low single-digit range, especially next month, as December

2009 IIP touched an all-time high of 18%,” they said.

Nov IIP plunges to fiscal's low of 2.7%

The Financial Express
Industrial output grew at 2.7% in November, the slowest this fiscal, pulled down by the dismal show in

manufacturing sector, especially consumer goods. Coming as it does after a robust 11.29% growth in

October, economists refused to take solace from the fact that a high base effect was part-reason for
the fall in growth. Sequentially, November industrial growth was 3.6% lower than in October.

Rohini Malkani, economist with Citi India said that although it is difficult to make predictions based on

volatile data, IIP is likely to be low in December.

 RBI seeks wealth management details post Citibank scam-

The Economic Times
The Reserve Bank of India (RBI) has asked select banks to share details of their wealth

management businesses following the 400-crore fraud perpetrated by a Citibank employee.

January 16th

  Citibank working on 'fair compensation' for affected customers

Economic Times

Citibank , which has been hit by a Rs 400 crore fraud at its Gurgaon branch, on Saturday said it is

reconciling its accounts and working out a "fair compensation" for those customers affected by it.

"This process will happen over a period of time. We would like to thank our customers for their

patience and co-operation," the bank said in a statement. "We have since been in contact with our

impacted customers and are committed to safeguarding our customers' legitimate interests," it added.

Citi to compensate scam victims

The Hindu Business Line
Citibank said on Saturday that it has begun working out a “fair compensation” for customers

impacted by the alleged fraud committed by its relationship manager, Mr Shivraj Puri, at its

Gurgaon branch.

Citibank plans `fair compensation' for scam-hit customers

The Indian Express
Hit By the Rs 400-crore fraud at its Gurgaon branch, Citibank said it is reconciling its accounts

and working out a "fair compensation" for those customers affected by it.
The impact of higher interest rates on the BSE-500
Mint
This year has seen a sharp correction in Indian equity markets. The bellwether Sensex index on the

Bombay Stock Exchange shed around 9% from its high of 20,621 points in a fortnight. The fear of

interest rate hikes to rein in inflation and its consequent impact on corporate growth and profitability

looms large over the markets. However, present concerns are not unwarranted. A Citigroup report

states, “We expect RBI (Reserve Bank of India) to raise rates by a minimum of 75 basis points by

2011.” One basis point is one-hundredth of a percentage point.

JANUARY 17TH

Sensex loses sheen over prices, graft

Mint
Fears of anti-inflationary measures hurting economic growth, negative sentiment over corruption

and corruption cases in key sectors such as telecom, real estate and banks have begun hurting

the valuation of Indian stocks. Citigroup analysts project a Sensex target of 22,000 for December

2011. Both these projections were made in end-December.

Banks underwrite Tata Steel's plan to raise funds

Mint
Seven investment banks have underwritten Tata Steel Ltd's proposal to raise `3,385.80-3,477 crore

from the public by issuing 57 million shares in the price band of `594-610. The seven bankers are

Kotak Mahindra Capital Co. Ltd, Citigroup Global Markets India Pvt. Ltd, Deutsche Equities India Pvt.

Ltd, HSBC Securities and Capital Markets (India) Pvt. Ltd, RBS Equities India Ltd, Standard Chartered

Securities (India) Ltd and SBI Capital Markets Ltd's parent State Bank of India. 
Post-Citibank fraud, HNIs seek safety in custodian services

Economic Times

The Citibank fraud is causing many high net worth individuals (HNIs) to open accounts with

custodians which complement the services of brokers. While brokers advise clients and

execute trades on their behalf, custodians manage the clearing and settlement of those trades.

The concept, prevalent in the US, the UK and Australia, is just beginning to catch on in India.

January 18th

Citibank's compensation not to impact probe: Police with Owais Patanwala

Daily News & Analysis
Citibank’s decision to compensate victims of the Rs400 crore fraud will not impact the ongoing

investigations against the accused as they face criminal charges, police said on Monday.

Credit card benefits: What money can't buy- with Owais Patanwala

ET Wealth (clip attached)

The benefits for credit cardholders don't end with interest-free spending, cash-back offers and

reward points. A squeaky clean credit card history can help you get a high credit score from a

credit agency such as Cibil. A good credit report, in turn, will come in handy when you go looking

for a loan. A careful spender can use his credit card statement to plan his expenses better. Some

credit card companies such as Citibank give you an overview of your spending pattern across

categories. It can tell you if you have been spending too much on entertainment or eating out.

“Customers can analyse their usage and rebalance their spending patterns. It can help them

in budgeting,” says Sandeep Bhalla , business head, Credit Payment Products, Citibank.

Credit Cards: The catch in cash-back offers- with Owais Patanwala

ET Wealth (clip attached)
It’s like getting paid to spend. You made a purchase of Rs 5,000 using your credit card. The
statement reflects a credit of Rs 250 in your account next month. Your bank has paid you

back 5% against the Rs 5,000 you spent. The percentage returned to customers varies across

credit card issuing banks. Put another way, there are plenty of riders. Take for instance, the

IndianOil Citibank Titanium Credit Card. The card promises a cash-back of Rs 200. But the

terms and conditions say the cashback is available only on the first Rs 1000 spent . Also,

this amount has to be spent within the first month of receiving the card.

I-bankers to manage ONGC's FPO for 'free'

The Economic Times
Morgan Stanley, HSBC, Nomura, Citigroup, JM Financial Services, and Bank of America Merrill

Lynch will arrange ONGC’s 12,500-crore follow-on share sale for an aggregate fee of one rupee,

said people familiar with the bids.

I-bankers agree to underwrite Tata Steel's follow-on issue

The Economic Times
Bankers have agreed to underwrite, or buy the unsubscribed part of a 3,477-crore equity issue

by Tata Steel leading many in the market to believe that the company was uncertain of the level

of investor interest. Tata Steel is the first company that has taken underwriting commitment from

merchant bankers. It would pay a fee of about 1.5% or around 50 crore over and above the fee

bankers will receive for managing the issue. According to the red herring prospectus, seven

merchant bankers — Kotak, Citigroup, Deutsche Bank, HSBC, Royal Bank of Scotland, SBI

Caps and Standard Chartered — have underwritten the issue at the lower end of the price band

of 594-610 . In case of poor response in a book-building share issue, a company usually revises

the band downward to discover a new price point for attracting investors.

Tata Steel follow-on issue opens today for anchor investors

The Hindu Business Line
The proceeds from the Tata Steel follow-on public offering will be used mainly for the expansion

of the company's Indian operations. Kotak Mahindra Bank, Citi, Deutsche Bank AG, Royal Bank

of Scotland Plc, SBI Capital Markets, Standard Chartered Bank Plc and HSBC Bank are the
managers to the issue.

SAIL calls off roadshows for 6,500-crore FPO

The Economic Times
SAIL, the state-owned steel maker that planned a follow-on share sale to raise 6,500 crore, has

called off investor roadshows after a conflict of interest issue among banks leading the sale cropped

up, two people familiar with the developments said. The government has raised . 22,763 crore

through sale of shares in hydro-power generator SJVN, consultants Engineers India, miners Coal

India and MOIL, Power Grid Corp, Shipping Corp. Tata Steel’s share sale is led by Deutsche Bank,

Standard Chartered, Citi, Kotak Mahindra, HSBC, SBI Caps and RBS.

ONGC appoints 6 merchant banks to manage stake sale

Business standard
State-run Oil and Natural Gas Corporation has appointed six merchant bankers — Bank of America,

Citigroup, HSBC, Nomura Holdings, JM Financial Services, Citigroup Inc and Morgan Stanley — to

manage the sale of government’s 5 per cent stake in the company.

ONGC issue: Six bankers shortlisted

The Hindu Business Line
The Disinvestment Department and ONGC have together shortlisted six merchant bankers to manage

the sale of five per cent Government equity in ONGC. The Government is looking to mop up between

Rs 13,500 crore to Rs 18,000 crore from the stake sale, which will happen through a follow-on public

offering (FPO). The six merchant bankers that have been shortlisted are Citigroup, Nomura, JM

Financial, Bank of America Merrill Lynch, HSBC and Morgan Stanley, sources close to the

development said. The Centre currently holds 74.14 per cent stake in ONGC. After the FPO,

which is likely to hit the market in March, the Centre's stake will come down to 69.14 per cent.

HSBC, three other banks may lose mandate for SAIL share sale
Mint
HSBC Holdings Plc and Deutsche Bank AG are among four banks that may be replaced as

arrangers for Steel Authority of India Ltd's (SAIL) share sale after they agreed to work for a rival,
steel minister Virbhadra Singh said. Kotak Mahindra Capital, based in Mumbai, ranked No.1 in

managing state share sales in 2010, followed by New York- based Citigroup and Mumbai- based

ICICI Securities Ltd, according to data compiled by Bloomberg. Citigroup topped the rankings for

all share sales in India, the data shows.

ONGC hires six banks for $3 billion issue

Mint
Staterun energy explorer Oil and Natural Gas Corp. Ltd (ONGC) has mandated six banks, including

Bank of America Merrill Lynch and Citi, for a share sale to raise around $3 billion (`13,680 crore),

IFR said on Monday. Other banks hired for the offering are HSBC, Morgan Stanley, Nomura and

Indian investment bank JM Financial, it said citing people familiar with the development. The

government will sell a 5% stake in ONGC through the followon share offering. The issue is

expected to be launched in March.