SBI Raises $1.28 Billion Selling Shares to Boost Capital Ratio

State Bank of India, the nation’s largest lender, raised 80.3 billion rupees ($1.28 billion) selling shares to increase its capital buffers.

The Mumbai-based bank priced about 51 million shares at 1,565 rupees apiece, the lower end of a band, according to an e-mailed statement today. Citigroup Inc., Deutsche Bank AG, HSBC Holdings Plc, JPMorgan Chase & Co., Bank of America Corp., UBS AG and SBI Capital Markets Ltd. managed the sale, State Bank of India said in the statement.

The sale is the largest by a bank in India. The 207 year-old state-run lender is strengthening its capital adequacy ratio as increasing bad loans erode its profitability.

The bank will have a capital adequacy ratio of 12.8 percent after the share sale is completed, according to the statement. State Bank of India (SBIN) had a capital adequacy ratio of 11.69 percent at the end of September, exchange filings showed.

The gross ratio of soured debt to total lending widened to a five-year high of 5.64 percent in the three months to Sept. 30 from 5.15 percent a year earlier, State Bank of India said in an exchange filing on Nov. 13.

The bank needs to raise more than 1.2 trillion rupees by March 2018 to comply with higher capital requirements under Basel III rules, Diwakar Gupta, the then chief financial officer, said in September 2012. It sold 20 billion rupees of shares to the Indian government on Jan. 2, according to the statement today.

State Bank of India shares fell 3.6 percent to 1,516.60 rupees in Mumbai.

To contact the reporters on this story: George Smith Alexander in Mumbai at galexander11@bloomberg.net; Anto Antony in Mumbai at aantony1@bloomberg.net

To contact the editor responsible for this story: Philip Lagerkranser at lagerkranser@bloomberg.net

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