SBI to provision $10 mn for subprime

SBI to provision $10 mn for subprime
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First Published: Wed, Apr 23 2008. 02 42 PM IST
Updated: Wed, Apr 23 2008. 02 42 PM IST
Mumbai: State Bank of India will make a provision of $10 million (Rs400 crore) for mark-to-market losses due to the subprime crisis, and said it expects clients to book losses of up to Rs7 billion ($175 million) from derivatives contracts.
“Due to subprime abroad we will have to provision for an MTM loss of $10 million,” chairman O.P. Bhatt told reporters at a conference on Wednesday, 23 April.
“We don’t have any other paper on subprime, and we don’t see the value of investments going down further.”
Bhatt also said SBI customers could book notional losses on foreign exchange derivatives of Rs6-7 billion. He said State Bank, India’s largest bank, had 130 million customers and none of them had taken any legal action over derivatives contracts.
Several Indian firms are taking banks to court over foreign exchange derivative trades that have gone sour. About five to six small firms have filed lawsuits against private-sector banks, with some alleging mis-selling of derivative products.
Axis Bank said on Monday its clients had incurred losses of Rs6.7 billion on account of foreign derivative exchange trades.
Bhatt also said he saw SBI maintaining total loan portfolio growth at 22% for 2008-09, the same as in 2007-08.
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First Published: Wed, Apr 23 2008. 02 42 PM IST