Good investment opportunity: SBI

The country's largest bank, State Bank of India (SBI), has decided to buy shares of its competitor and the second largest lender, ICICI Bank, which is offering equity shares in a follow-on offering next week.

SBI's investment committee considers the business rival to be a good investment opportunity. The investment would be part of the government-owned bank's treasury operations.

A senior SBI official said the bank would bid for ICICI Bank shares, but the exact quantum is still to be decided. SBI does not hold any ICICI Bank shares though it held equity investments of Rs 1,973.48 crore at the end of March 2007. SBI increased its investments in equity shares in 2006-07 by Rs 455.46 crore.

The SBI official said "Though we compete with each other, an exposure to ICICI shares will be part of our portfolio investment that reflectsprospects for the sector and the returns it promises. Keeping in view the high growth that the Indian economy is enjoying, financial sector entities will have huge business opportunities, providing room for all players."

Public sector banks together had invested a total of Rs 8,929.22 crore at the end of 2006-07, up from Rs 6,105.93 crore a year earlier.

Life Insurance Corporation of India (LIC), which already owns 7.6 per cent stake in ICICI Bank, is also likely to bid for the private sector bank's shares in an attempt to maintain its shareholding at the same level.