Mumbai: Banks in India will have to raise their capital many times to enable them to grab a share of the global banking opportunity following the collapse of large lenders in the United States and Europe, speakers at a conference said on Tuesday.
O.P. Bhatt, chairman of State Bank of India, the country’s largest lender with assets of nearly $200 billion at the end of March, said it was not big enough to meet the demand of large Indian companies.
“We need to consolidate...we need to raise capital. We need to have at least four to six large banks of our size or larger than us,” he told the gathering.
By comparison, the largest Chinese bank, ICBC, was more than five times the size of State Bank, Bhatt said.
ICBC is the world’s biggest bank by market value at $238.3 billion and had assets of $1.4 trillion at the end of 2008.
Bhatt said earlier this year State Bank, which is 59.41% owned by the government, may need to raise between $2 billion to $4 billion in equity in 2009-10.
ICICI Bank and HDFC Bank, India’s top two private sector lenders, had assets of around $78 billion and $38 billion respectively.
Janmejaya Sinha, chairman for Asia-Pacific at Boston Consulting Group, said banks needed to have a balance sheet size of at least $200-$300 billion to compete in the global arena.
“The current situation is conducive for banks to look at acquisition opportunities abroad,” M.V. Nair, chairman and managing director of state-run Union Bank of India, said.
But the government has to take a view on consolidation of state-owned banks, he said.