Tuesday June 26, 02:04 AM
SBI bets on M&A funding
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By Banking Bureau
The country's largest bank, State Bank of India (SBI), funded 13 M&A deals with total exposure greater than $1 billion. In order to boost this portfolio, a Global Syndication and Participation desk has been created in Singapore and another desk will be put in place in London during the current year, SBI chairman OP Bhatt said while addressing the 52nd annual general meeting (AGM) meeting of the bank on Monday. Bhatt said, "SBI's shareholdings in the asset management company and insurance company would be transferred to a holding company which can be listed separately to fund the capital needs of these two companies. Later, talking to reporters on the sidelines of the AGM, Bhatt said that "Rs 50,000 crore capital was needed for his bank in three years in addition to the recent earnings." Moreover, there will be a growing need for Tier-I capital, which is also important for the international valuation of the bank. In this context, the banking system, being dominated by public sector banks, will face a constraint in issuing equity to the public if the minimum government shareholding cannot be relaxed or government cannot take up its pro-rata share in future offerings. Also, the bank has approved a policy for financing carbon credits and is in the process of launching various products such as carbon credit delivery guarantee and securitisation of carbon credit receivables. On reverse mortgage, he said that his bank was examining this product line. The bank has decided to enter the private equity sector with a focus on infrastructure projects, mid-corporates and the emerging technology areas. Also, he said that his bank was looking at mid- and small-size acquisitions, rather than large-size acquisitions. Bhatt hoped that the lending rate would also start softening soon. On general insurance, he said that his bank was already in talks with foreign companies.
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