IPO plan put on hold, awaiting SBI merger

IPO plan put on hold, awaiting SBI merger

The largest among the associate banks of the country’s largest lender State Bank of India Ltd (SBI)—State Bank of Hyderabad, or SBH—has decided to put on hold its plans for an initial public offer of its shares.

This follows SBI’s decision earlier this week to merge State Bank of Saurashtra, another associate bank, into itself. SBH, which has assets worth Rs77,500 crore, had planned to tap the capital market before the end of this fiscal year to augment its capital adequacy ratio.

SBI has a total of seven associate banks, of which four are unlisted. The other two are the State Bank of Indore and State Bank of Patiala.

“My gut feeling is that the entire merger process of associate banks with SBI should be completed before 2008-end," SBH managing director Amitabha Guha told reporters here on Thursday.

SBH had raised Rs550 crore through a subordinated debt issue last September to augment its capital adequacy ratio to 12.51% at the end of fiscal year 2007 from 12.08% at the beginning of the last fiscal year. The debt programme aimed at bolstering capital to support asset growth, and to prepare the bank to meet prudential norms set by the Reserve Bank of India for fiscal 2008.