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SBI seeks bankers for sale of non-core asset

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Mumbai : The State Bank of India has called for bids seeking to hire an investment or a merchant banker to enable sale of non-core assets to boost its capital base after the recent qualified institutional placement. In a tender notice Thursday, the lender sought bids to appoint a banker to guide the partial or full stake sale in non-core investments. The last date for submission of proposals is Oct 3, the notice said. According to the tender notice, SBI would like to tap strategic investments made in stock exchanges, depositories, clearing corporations, warehousing corporations, credit rating agencies, to boost capital for its core banking operations. This is in line with the government’s push to state-owned banks to shore up their capital base via internal resources, including exit from non-core assets.

    Following the merger of its five associate banks and Bharatiya Mahila Bank with itself on Apr 1, the bank had raised 150 bln rupees through a qualified institutional placement in June. This had helped the bank raise its capital adequacy ratio to 13.31% as on Jun 30 with a tier-I capital of 10.67%. Also, since the Reserve Bank of India has tagged SBI as a domestic systemically important bank, the public-sector lender needs to set aside higher levels of capital than its peers. In June, SBI Chairman Arundhati Bhattacharya had said that the bank would look at monetising its investment in some non-core assets but had not provided any specifics about exiting the said investments. Bhattacharya had said that the bank was also looking to divest 18.3% holding in UTI Asset Management Co if the mutual fund gets the long-delayed nod for a listing. From its core investments, SBI is divesting about 8% stake in SBI Life Insurance through an initial public offering and is eyeing a 700-bln-rupee valuation for the whole business. The state-owned bank along with its associate SBI Capital Markets Ltd currently holds 9.52% stake in National Stock Exchange. As on Jun 30, SBI held 3.52% stake in Metropolitan Stock Exchange of India and 5% in Central Depository Services (India) Ltd.

   In June, SBI had diluted a 4.57% stake in Central Depository Services (India) Ltd, through an initial public offering, and currently holds 5%. SBI holds 21.20% and 21.67% stake in Clearing Corp of India Ltd and Central Warehousing Corp Ltd, respectively.


Boosting capital base

  • Post-merger of five associate banks and Bharatiya Mahila Bank with itself, the bank had raised 150 bln rupees through a qualified institutional placement
  • SBI is also divesting about 8% stake in SBI Life Insurance through an initial public offering and is eyeing a 700-bln-rupee valuation for the whole business