UPDATE 2-India's SBI eyes big expansion, may sell shares by Dec
(Adds details)
MUMBAI, June 28 (Reuters) - State Bank of India (SBI.BO), the country's largest bank, plans to sell shares by the end of this year as it looks to raise up to $12 billion to fund expansion to stay ahead of ambitious rivals in the fast-growing econony.
The state-run bank may require up to 500 billion rupees in the next few years to grow its business and invest in ventures including insurance, private equity and wealth management, Chairman O.P. Bhatt said on Thursday. Last week, SBI's private sector rival, ICICI Bank (ICBK.BO), raised $4.9 billion in a share sale -- India's biggest ever -- and others such as HDFC Bank (HDBK.BO) and UTI Bank UTBK.BO have also lined up share sales to raise millions of dollars. "All banks need capital, given the growth. There can be no bank which does not need capital," Bhatt said.
Indian banks have been raising funds to meet the growing demand for loans in Asia's third-largest economy, which grew 9.4 percent in the year to March 2007.
SBI, which has a life insurance joint venture, will also finalise a venture partner for general insurance, Deepak Chawla, the bank's managing director for new business, told a news conference.
SBI holds majority stakes in a life insurance venture with Cardiff of France and an asset management company with Societe Generale (SOGN.PA).
The bank could also set up and list a holding company for its subsidiaries, Bhatt said.
India's cabinet in April approved changes in a law to allow more freedom to SBI's subsidiaries: State Bank of Bikaner and Jaipur (SBKB.BO), State Bank of Mysore (SBKM.BO), State Bank of Travancore (SBKT.BO), State Bank of Patiala, State Bank of Indore, State Bank of Saurashtra and State Bank of Hyderabad.
SBI's plans for a holding company follows ICICI Bank's decision to set up a holding company for its stakes in asset management and insurance ventures.
SBI, which has nearly 10,000 branches and 200,000 employees and controls nearly a quarter of India's banking business along with its associates, also plans to reach another 100,000 villages through intermediaries, Bhatt said.
Bhatt said the bank was taking initiatives to improve efficiency and customer service, and this had helped it arrest the fall in its market share since September last year.
"We are undergoing a transformation. First, we want to be the best bank in the country and then the best global bank," Bhatt told a news conference.
He said SBI aimed to raise its market share in funding mergers and acquisitions to 30 percent in five years from the current 15 percent.
((Reporting by M.C. Govardhana Rangan and Himangshu Watts, editing by John Mair; Reuters Messaging: himangshu.watts.reuters.com@reuters.net +91 22 6636 9030)) Keywords: SBI INDIA/
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