State Bank of India Said to Start $1.5 Billion SaleGeorge Smith Alexander and Anto Antony
State Bank of India, the country’s largest lender, will start a share sale to raise more than 92 billion rupees ($1.5 billion) to bolster its balance sheet, five people with knowledge of the matter said.
The Mumbai-based bank is offering as many as 58.9 million shares at a discount of as much as 2 percent to today’s closing price of 1,596.30 rupees, the people said, asking not to be identified before an official announcement. State Bank shares rose 0.1 percent in Mumbai today.
SBI is strengthening its capital adequacy ratio by selling shares as rising bad loans hurt profitability at the government-run lender. 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, SBI said in an exchange filing on Nov. 13.
Citigroup Inc., Deutsche Bank AG, HSBC Holdings Plc, JPMorgan Chase & Co., Bank of America Corp., UBS AG and SBI Capital Markets Ltd. are managing the sale, the people said. The 207-year-old lender had a capital adequacy ratio 11.69 percent at the end of September, exchange filings showed.
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 will also sell 20 billion rupees of shares to the Indian government, it said in a Dec. 12 filing.
The stock slumped 26 percent in 2013, compared with the 9.4 percent drop in the 12-member S&P BSE Bankex Index.
M. K. Rekhi, Mumbai-based spokesman for the lender declined to comment immediately.