SBI may wait till last quarter for equity issue
27 Jun 2007
The
State Bank of India is likely to wait until the last quarter
of calendar 2007 before entering the capital market with
an equity issue that will bring down the government stake
to 51 per cent. According to Newswire 18, SBI says that
there is yet no concrete decision on the FPO and it is
still in talks with the government on the same.
Meanwhile, the SBI chairman said that the bank need Rs50,000
crore of capital over the next three years of which close
to Rs20,000 crore is needed this year itself.
He, however, wants to wait for the monsoon session when
the SBI Act may be amended. The bank may sell nine crore
shares in the last quarter to raise Rs13,000 - Rs14,000
crore.
The amendment will enable the government to bring down
its stake up to 51 per cent. Currently the SBI Act requires
a minimum government or RBI stake at 55 per cent.
The RBI / government currently has 59.7-per cent stake.
So, if the amendment goes through, the bank can, instead
of selling 4.5 crore shares, sell 9 crore shares at a
price of about Rs1,500. That will mean Rs 13,000 crore.
Moreover,
if the act is amended, the Chairman will also get the
right to bring down the face value of the share from Rs10
to Rs2. This will make the price one fifth and, therefore,
more attractive to the retail audience.
SBI wants to make this one big issue together rather than
do a piecemeal issue earlier. SBI''s current capital adequacy
rate or CAR is at 12.35 per cent.
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