LIC buys SBI stake worth Rs 5700 crore in QIP issue

State Bank of India on Friday said its qualified institutional placement offer for raising Rs 15,000 crore was oversubscribed, with demand exceeding Rs 27,000 crore and the issue getting priced at Rs 287.25 per share.

"As per the plan we have put in place, we are quite comfortable on the capital front till next year". Of the balance amount, 26% was allotted to foreign portfolio investors, 25% to domestic portfolio investors excluding LIC and 11% to overseas hedge funds. Even without this equity and the kind of earnings we were expecting, we would have met all the regulatory capital requirements up till FY 2019, including Basel III requirement.

The PCA framework is, thus, meant to encourage banks to eschew certain riskier activities and focus on conserving capital so that their balance sheets can become stronger, the central bank said.

Speaking to reporters, here, SBI Chairman Arundhati Bhattacharya said the QIP evinced interest from a wide variety of investing institutions.

Additionally, SBI will raise funds in the current financial year through share sales in its life insurance arm and other non-core businesses. Besides, it may consider paring stake in outfits like CCIL, NSE and UTI MF.

"The new rates will be effective from June 15..."

Plus, the bank also has plans for unlocking value by listing at least the life insurance subsidiary.

RBI recently asked banks to immediately review their exposure to the telecom sector, which has total debt of about Rs 4.6 lakh crore, and make higher provisions to firewall their business against any future stress. "So, to that extent there will be some more (resources) that we will get through our non-core (asset) divestments".

The issue received an overall FII demand in excess of Rs 11,000 crore.

LIC's stake after this investment would be 10.4%, up from 8.6%. "We raised capital mainly in order to support growth because we very much believe that growth is around the corner", said Ms. Bhattacharya. Since may 2017, the rate for the new customers of HDFC is at 8.50 per cent for all customers for loans between Rs 30 lakh and Rs 75 lakh. The share sale will improve the bank's capital-to-risk weighted assets ratio to 13.64%, while the common equity Tier 1 is expected to go up to 10.2%.

  • Zachary Reyes