SBI plans expansion in Africa and Southeast Asia

The lender plans to allot $200mn on overseas acquisitions and targets on banks with strong corporate banking services.

Public sector lender State Bank of India (SBI) is looking to acquire banks in Africa and Southeast Asia as it seeks to ramp up its overseas operations, according to a senior company source with direct knowledge of the matter.

The country’s top lender planned to spend roughly $200 million on overseas acquisitions and would mainly focus on banks with strong corporate banking services in the two regions, it added. “Earlier, we were looking at large acquisitions. However, after the global financial meltdown, we are looking at smaller deals,” the source said on condition of anonymity.

“We are looking at acquisitions in these markets. We see enormous opportunities on rising interest of Indian companies there. Expanding operations on our own would be challenging,” it said further. With a market value of $37 billion, SBI was aiming to raise the contribution of international operations to the group net profit to 25 per cent over the next five years, from about 16 per cent now, the source said.

As cash-rich Indian firms farm out across the globe through a slew of merger and acquisitions and joint ventures, stodgy Indian banks are also looking to follow suit to serve the needs of the local companies.

SBI, which controls a quarter of Indian bank loans and deposits along with its associates, and its rivals ICICI and HDFC Bank have been slower than their Chinese counterparts as far as expanding international operations is concerned.

China Construction Bank, the country’s second largest lender, is keen to acquire a stake in Malaysian lender EON Capital Bhd, The Edge weekly newspaper reported last month.

View the full story in Business Standard.