SBI begins sale of non-core assets to expand capital base
MUMBAI: State Bank of India (SBI) has started the process for selling some of its stake in some of its strategic investments which are not critical to its core business in an attempt to shore up its capital base, two people aware of the development said.
SBI has stakes in stock exchanges, depositories, clearing and warehousing corporations, and credit rating agencies.
As a first step, the bank plans to hire a merchant banker to assist in the process.
In June, SBI raised ₹15,000 crore through a qualified institutional placement (or sales to financial institutions), which saw its capital adequacy ratio (a measure that looks at a bank’s capital in proportion to its loans, accounting for risk) increasing to 13.31% as on June 30.
Once a merchant banker is on board, we will look at which assets we can monetise, whether fully or partially. Since these are not fire sales, we want to have some kind of a timetable. From November, we should be able to go to the market,” said the first person, a SBI executive, on condition of anonymity.
A spokesperson for SBI said that as mentioned by the bank’s chairman Arundhati Bhattacharya “on various platforms”, SBI would exit, wholly or partially, its investments in “noncore assets”. “There is a plan in place and we would do the transaction at an appropriate time. However we would not like to comment on an individual company or transaction.”
SBI is divesting 8% in joint venture SBI Life Insurance Company Ltd’s IPO, which opened for subscription on Wednesday.
SBI held 5.19% in the National Stock Exchange Ltd and had 3.52% in Metropolitan Stock Exchange of India Ltd at the end of June. In July 2016, SBI sold a 5% shareholding in NSE for ₹911 crore. SBI is also a shareholder in SMERA Ratings Ltd, which is promoted by the Small Industries Development Bank of India.
The country’s largest lender also holds 21.20% in Clearing Corporation of India Ltd (CCIL), according to the latest annual reports of these companies.