SBI to raise up to ~14,000 cr via AT1 bonds

State Bank of India (SBI) plans to raise up to ~14,000 crore in capital through additional tier I bonds (AT1 bonds) in the current financial year (FY22) to enhance its capital adequacy profile.

The Central Board accorded approval for raising capital by way of issuance of Basel lll-compliant debt instrument in rupee and/or US dollar in FY22, the bank said in a filing with the BSE. Its stock closed 1.64 per cent higher at ~419.55 per share on the BSE.

An SBI executive said this is enabling provision and the actual issuance will depend on the market conditions and credit growth in the system. The fundraising is subject to concurrence with the government of India, its promoter, which held 57.63 per cent stake as of March 31, 2021.

Its capital adequacy ratio (CAR)

stood at 13.74 per cent as of March-end 2021, up from 13.06 per cent in March 2020. Its common equity tier I (CETI) was 10.02 per cent in March 2021, higher than the regulatory requirement of 7.97 per cent. Its AT1 level was 1.42 per cent in March 2021, up from 1.23 per cent in March 2020. Being a systemically important financial institution, the bank has to maintain a higher level of CAR than its peers. With CETI level higher than regulatory requirements, SBI is not looking at raising equity capital for now. Besides retained earnings, the bank has an option to monetise stake in subsidiaries like general insurance and asset management units through their listing to raise resources.

As and when external capital is required, it would approach the board and shareholders for requisite approvals to raise resources from the market.