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SBI keen to expand overseas in a big way

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Fundraising
Rs 2000 cr subordinated debt issue
Hybrid instruments at a later date


NETWORKING MILESTONE Mr A. K. Purwar (left), Chairman, State Bank Group, and Mr Bill Padfield, CEO, Datacraft Asia, at a press conference in Mumbai on Friday. — Paul Noronha

Mumbai , Feb. 24

State Bank of India is looking at overseas acquisitions aggressively and is talking to some players overseas. The bank has also identified a bank in Bangladesh, said Mr A.K. Purwar, Chairman, SBI.

He was speaking to reporters on the sidelines of a press meeting to announce the networking of the group's 10,000 branches by Datacraft India. This deal would cost the bank Rs 500 crore.

"We are becoming more ambitious in overseas acquisitions. We are working on acquiring a small bank, but we would also be interested in a big one." The bank would be willing to pay up to $100 million for a single deal, Mr Purwar said.

So far, all the acquisitions by SBI have been less than $10 million. In February 2005, it acquired 51 per cent stake in Indian Ocean International Bank in Mauritius for $8 million, 76 per cent stake in Kenyan bank, Giro Commercial Bank for $7 million in October 2005 and 76 per cent stake in Indonesian bank, PT Bank IndoMonex in November 2005.

When asked about the financial situation of the Bangladesh bank SBI was in talks with, Mr Purwar said, "When we negotiate we look not only at the bank's position today, but how it will be in times to come. We are confident that even if the bank we take over is not a very good one, we can turn it around."

About the bank's capital requirements, the Chairman said SBI would enter the market to raise around Rs 2,000 crore through subordinated debt issue in the first quarter of 2006-05 as it has sufficient headroom. The bank raised Rs 3,300 crore through the same route in 2005. The bank may also look to raise capital through hybrid instruments either towards the end of next fiscal, 2006-07, or early 2007-08, he said.

"We are expecting a growth of 30 per cent this year. There is huge credit growth in the economy from all sectors. This is likely to last for two to three years therefore we would require capital next year," he said.

To meet the capital requirements, banks will have to push resource mobilisation and go beyond deposit mobilisation, Mr Purwar said. "Bank will have to look at securitisation and refinancing agencies such as Nabard, Sidbi and NHB," he said.

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