SBI hopes to recover most of its $5 billion Lehman exposure: O P Bhatt
20 Sep 2008
Mumbai: The State Bank of India's exposure to the failed US bank Lehman Brothers is around $5 billion and the bank expects to recover 60-70 per cent of the amount, group chairman O P Bhatt said.
He said SBI's $5 billion exposure is negligible considering its global balance sheet of $250 billion. He also denied the Lehman exposure would make any great addition to SBI's non-performing assets.
However, NPAs of banks in general and particularly of those with major business connections with the failed Layman Brothers may rise in the future, Bhatt said, adding SBI has, in fact, seen a decline in NPAs over the years.
Bhatt also ruled out the possibility of the current high interest rate regime triggering an increase in defaults.
Addressing a media conference in Bhavnagar, on the sidelines of a function to announce the merger of the State Bank of Saurashtra with the SBI, Bhatt said the bank has no immediate plans to merge any of its associate banks with itself.
Mergers should go beyond balance sheets and look for business synergies, Bhatt added.
State Bank of Saurashtra, Bhatt said, is much older than SBI. The SBS was constituted with the merger of several small banks owned by the states of Bhavnagar, Jamnagar, Nawanagar and other small states in 1950, whereas SBI was set up in 1955.
Post merger, the bank would be part of the SBI and staff members would get pay and perks accordingly, he said, adding, that SBS customers also stand to gain from the merger with SBI.
''Sometimes it becomes a complex issue. After this merger, we would watch and monitor the situation in the banking industry and would think of merger only if any associate bank comes forward for the marriage of convenience,'' Bhatt said.
''At a time when there is turmoil in the international banking system, we are happy that our policy of insulation has paid dividends. We should also learn lessons from this,'' he added.
Speaking on the occasion, secretary for financial services Arun Ramanathan said that after the US credit market meltdown, the government has made a review of global and Indian entities in terms of their balance sheets.
While there seems to be no big direct hit on us, the government is watching for any indirect impact, he said.
