Indian banks complain of high valuations in Indonesia

Overvalued stake offers shun SBI and Union Bank of India from buying Indonesian banks.

Sources said that while Union Bank is currently negotiating with two to three Indonesian banks, SBI has shelved its plans due to high valuations.

In 2005, SBI had acquired 76 percent stake in a small Indonesian bank, PT bank IndoMonex. At that time, the bank was valued at 2.7 times its book value. Likewise, PT Bank Swadesi, slightly larger than IndoMonex and valued at 2.5 times of its book value, was acquired by Bank of India.

Now, these banks are finding valuations higher compared to other markets, according to a report in Business Standard.

"They (valuations) were high in our opinion. That is why we did not buy. But, whether they have gone still higher I do not know since I do not have the data," said SBI Chairman OP Bhatt.

MV Nair, chairman and managing director of Union Bank of India, which has shortlisted a few banks in Indonesia, also feels that valuations are on the higher side.