SBI eyes second buy in Indonesia

Mumbai: State Bank of India (SBI), the country's largest bank, is actively considering a buyout in Indonesia. The deal size is expected to be over $100 million.

A senior SBI executive told FE, “The bank has already shortlisted three to four Indonesian banks for the proposed acquisition.” The deal would be SBI's second acquisition in Indonesia. In 2006, SBI had acquired 76% stake in PT Bank Indo Monex, an Indonesia bank, which was renamed as Bank SBI Indonesia—a SBI subsidiary.

"The Indonesian bank, which SBI is eyeing, would be merged with Bank SBI Indonesia that currently offers retail and wholesale banking services through 12 branches in the country," the SBI executive said.

In a bid to capitalise on the rising trade and investment between Indonesia and India, Bank SBI Indonesia had launched its foreign exchange trade facility last month. This facility enables the bank to offer foreign exchange services, trade finance and remittance facilities, and depository advisory services. Indonesia is India's second largest export market in Asean after Singapore. India is one of the largest importers of Indonesian commodities including palm oil, coil and gambier.

Indonesia is ranked 16th as a source of imports for India at $6.1 billion as on March 30, 2009, up 38% over the previous year. Currently, India's investments in Indonesia are at an impressive $2 billion. Indo-Indonesian trade crossed $10.6 billion last fiscal.

Sources reveal that SBI is also assessing a possibility to penetrate in countries such as Thailand and Vietnam. The bank is likely to open a representative office in Malaysia by March 2010. SBI's thrust to capture the lucrative business from the Far East region is evident from its Singapore subsidiary's balance sheet size that crossed $2 billion-mark as on September 30, 2009. SBI Singapore's trade finance business grew over 50% in the last six months.

To promote retail lending in Singapore, SBI is expected to open three new branches and two more off-site ATMs at a cumulative investment of over sing$35 million, and recruit over 60 personnel across various levels in the next 3-4 months. The bank launched its mortgage service on August 9, 2009. Till-date, it has transacted business worth over sing$10 million. SBI Singapore currently operates six branches and five off-set ATMs in the country.

As on March 30, 2009, SBI had 92 overseas offices across 32 countries, comprising of 37 branches, five sub offices, eight representative offices, 35 branches of subsidiaries, three managed exchange.