[sbinews] SBI on global buying spree (Economic Times)
- From: "Rajendra S. Pai" <rs.pai@xxxxxxxxx>
- To: <sbinews@xxxxxxxxxxxxx>
- Date: Wed, 7 Apr 2004 08:46:50 +0530
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SBI on global buying spree
SHAJI VIKRAMAN & SANGITA MEHTA
(Economic Times)
TIMES NEWS NETWORK[ MONDAY, APRIL 05, 2004 11:25:29 PM ]
MUMBAI: State Bank of India has embarked on a journey which no Indian bank
has ever dared to undertake. The country's largest bank, often considered as
a proxy for the Indian economy by foreign investors , is in the process of
acquiring a bank in the US, the world's biggest financial market.
The due diligence process is currently on. If negotiations are fruitful and
all approvals including regulatory ones are obtained, the deal could be
completed in the first half of this fiscal.
When contacted by The Economic Times , SBI chairman AK Purwar confirmed the
development. However, he declined to share more details.
Significantly, SBI is not prowling around only in the US market . SBI, with
assets aggregating over Rs 375,800 crore, is training its sights on
acquisition targets closer home in Asia and Africa as well.
Industry officials also view Sri Lanka as a potential destination for
acquisitions. SBI's overseas strategy is being driven by the fact that
Indian corporates are also expanding their activities abroad through
acquisitions and joint ventures.
SBI wants to position itself to tap this potential. It feels acquisition in
the overseas markets makes more sense than expanding branch network abroad.
Opening new branches in new markets takes time and requires investment in
understanding the market. Plus, it is difficult to snatch away business from
the existing banks in those markets. An acquisition, on the other hand,
comes as a going concern with its own asset book.
The bank management is confident that given its balance sheet size, scaling
up operations abroad should not be difficult.
If it clinches the deal, SBI will emerge as the first Indian bank to acquire
a bank in a developed financial market overseas. The development takes place
at a point when foreign banks are considering acquiring private banks in
India.
SBI has plans to expand its overseas offices to 75 in 38 countries by March
'05. At present, the bank has a network of 52 offices spread over 28
countries.
Its US subsidiary, SBI California, has four offices in California and there
are plans to open one more soon. Besides, SBI also has two branches in New
York and Chicago and an agency in Los Angeles. An agency is more like a
representative office with restrictions on the extent of banking business it
can conduct.
International business contributes about five per cent to the bank's total
business.
In fiscal 2002-03, SBI reported a net profit of Rs 3,105 crore. Among other
Indian banks, Bank of Baroda has also talked of expanding its presence
overseas. But this is likely to be achieved through organic growth. BoB now
has 61 offices in 17 countries and plans to have a presence in 100 countries
by 2010. India's largest private bank ICICI Bank also plans to have a
presence in 12-15 countries.
© Bennett, Coleman and Co., Ltd. All rights reserved.
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