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SBI to raise up to $4.3 bn in rights issue

SBI to raise up to $4.3 bn in rights issue
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First Published: Wed, Feb 24 2010. 01 53 PM IST
Updated: Wed, Feb 24 2010. 01 53 PM IST
Mumbai: State Bank of India, India’s largest lender, plans to raise up to $4.3 billion through a rights equity issue in 2010-11, about half the amount it needs to sustain growth over the next five years, its chairman said.
O.P. Bhatt said on Wednesday the bank would need to raise Rs40, 000 crore ($8.6 billion) to Rs50, 000 crore to feed demand for loans over five years in the fast-growing economy.
“If we can raise half of it anytime during the next 12-18 months, it will be great,” he told reporters on the sidelines of a banking technology summit.
The Rs10,000 crore to Rs20,000 crore rights offering will need the support of the government, which owns about 60% of the bank.
“Our rights issue can be successful only if government subscribes to it,” Bhatt said, adding the bank will start working with the government after the national budget on Friday that is expected to provide clarity on capitalisation plan for state-run banks.
Shares in the bank, which has a market value at $26.3 billion, have dropped 15.5% so far this year, more than a 6.8% fall in the main index.
The shares had rallied 76.2% in 2009, just behind the 81% jump in the index.
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First Published: Wed, Feb 24 2010. 01 53 PM IST