[sbinews] SBI acquires Mauritian bank for $10 mn (Economic Times)
- From: "Rajendra S. Pai" <rs.pai@xxxxxxxxx>
- To: <sbinews@xxxxxxxxxxxxx>
- Date: Tue, 8 Feb 2005 09:35:09 +0530
SBI acquires Mauritian bank for $10 mn
(Economic Times)
TIMES NEWS NETWORK[ FRIDAY, FEBRUARY 04, 2005 10:26:45 PM]
MUMBAI: In a first-of-its kind deal, the State Bank of India (SBI), the
country's largest bank, has acquired the control of Indian Ocean
International Bank, a Mauritius-based category-one bank.
The deal marks the first buyout of an overseas bank by a domestic one. In a
notice to the BSE on Thursday, the SBI said it has acquired over 51% in the
Mauritian bank for a consideration of $10m. Industry sources said SBI bought
the stake from a number of shareholders through a private deal.
"The bank has acquired the stake from some 930-odd shareholders," they said.
Indian Ocean International Bank has a market share of 7% in Mauritius and
has a limited network of 10 branches and 10 ATMs. SBI already has a presence
in the island nation through an offshore banking entity called SBI
International (Mauritius).
Although this entity can raise deposits and advance loans denominated in
dollars, it cannot undertake any domestic banking business. The acquisition
will help SBI undertake domestic business as well.
Mauritius has 20 commercial banks, besides the 14 non-banking finance
companies. "Following the acquisition, SBI will get an entry in the
Mauritius banking sector with a 7% market share for $10m.
Alternatively, it would have to invest close to $5m for a banking licence as
the initial capital stipulated by the regulator, which would mean starting
from scratch," said market sources.
"Some Indian banks that are in Mauritius have taken 40 years to gain a
market share of 2%," they added.
Indian Ocean International Bank is the fourth-largest in terms of market
share, after Mauritius Commercial Bank, State Bank of Mauritius and
Barclays. Sources said while the Reserve Bank of India has given an
in-principle approval for the deal, the Bank of Mauritius, too, has cleared
it.
SBI had been scouting around for an acquisition in Africa too.
Sources said SBI's deputy managing director BD Sumitra, who is in charge of
international banking and Bharati Rao, chief general manager in charge of
international banking, have signed the agreement in Mauritius.
SBI's investment banking arm - SBI Capital Markets had done the due
diligence for the parent bank for this deal
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