State Bank of India share sale expected end-2017

State Bank of India expects to complete a planned share sale by year-end, probably through a qualified institutional placement (QIP), bank chairman Arundhati Bhattacharya said on Friday.

SBI, India's biggest lender by assets, has shortlisted six banks to manage the sale that could be worth up to $2.3 billion.

"This is something for which we have everything in place but we will go when we find the market is conducive," Bhattacharya told Reuters on the sidelines of the St Petersburg Economic forum. Asked if she was confident the deal would happen this year, she said: "More or less."

Bhattacharya said the SBI would likely opt for selling the shares via a QIP, a method under which a listed company can issue equity shares and some other securities to a select group of institutional buyers. "It's a good way of raising funds in the sense that you are then able to go with people who have always supported you as well as bring more investors into India. It's a comfortable format to work with."

SBI recently posted its highest profit in six quarters but investors are wary about the outlook for its asset quality after it merged its five subsidiary banks with itself.

Bhattacharya pointed out the market would have to be a "little patient for at least two quarters before we are in a position to show good numbers".

But Indian banks, staggering under the weight of an estimated $150 billion in soured assets, are now contending with a fresh worry - the telecoms sector. Big losses at telecoms firms recently prompted the central bank to advise banks to review loan exposure to the industry and make provisions. Losses and share price falls at Reliance Communications have highlighted the squeeze afflicting the sector: fickle users, thin margins and crippling debt.

Bhattacharya said it was yet unclear if the telecoms losses could prove a bigger risk for the entire Indian economy but saw warning signs.

"If you see a sector developing a set of conditions that lead to stress it bears watching. The telecoms sector, due to various things that happened in the recent past, is showing those typical signs of stress and obviously therefore we need to look out," she said.

Bhattacharya said SBI's exposure to the weakest telecoms companies was "very very low" but noted the bank had expressed its concerns to the government recently.

"When we wrote to the minister we did that for the entire banking sector and believe this is not just Indian banks but there are companies that have debts to overseas banks too," she added.

Source: Khaleej Times