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State Bank of India will unlock value in its subsidiaries such as SBI Capital Markets and SBI General Insurance in FY2019. India’s largest bank is also revamping its overseas operations to ensure their long-term viability.
“All our subsidiaries have performed exceedingly well. There is a huge value in subsidiaries. We are in active mode in unlocking the value this year and in the next,” said SBI Chairman Rajnish Kumar.
Kumar said this year his bank doesn’t need any risk capital as it has internal accruals and surplus. “We need to fund growth. For that, we said that we need about ₹20,000 crore, which will come from the sale of non-core assets, Additional Tier-I bonds, etc,” he explained.
SBI is looking at SBI Capital Markets, which offers investment banking, project finance, initial public offering, merchant banking, mergers and acquisitions and debt restructuring, as a pure investment bank. Hence, the process of hiving off the latter’s project finance function and merging it with the parent is on.
“The intention is to eliminate the duplication of bandwidth between what SBI Caps and SBI do. This will result in faster turnaround time. SBI Caps’ domain knowledge is of immense use to the bank. We are looking at SBI Capital Markets as a pure investment bank. There again, the opportunities are huge,” said Kumar.
The bank is looking to induct a strategic partner in SBI Capital Markets. The partner can have up to 49 per cent stake.
Dinesh Khara, Managing Director, said SBI General Insurance and SBI Cards will be tapping the market this year and next year, respectively.
Overseas operations
B Sriram, Managing Director, said the bank is trying to re-look at some of the unviable overseas offices/ branches and see whether they need to be continued. For example, the Paris office is being closed and will be converted into a representative office, he added.
“In some areas, we are also looking at increasing our presence, especially in the neighbourhood. For example, in Nepal our operations are doing extremely well and there is a lot of advantage in spreading our wings there. And that is something we are looking at,” said Sriram, and added that the intent is to ensure that the long-term viability of SBI’s overseas branches/ offices is maintained.
Referring to the recently-opened UK subsidiary into which the retail part of the UK operations has been subsumed, Sriram said: “We have 12 branches (in the UK). Going forward, we have to look at how to improve the presence of that subsidiary as well. It is one of our biggest subsidiaries, having a good size of balance sheet ($2 billion).”
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