SBI plans $500 m bond issue

State Bank of India (SBI), the country's largest commercial bank, is planning to mop up $250-500 million through a bond issue in the next two-three months in international markets. The bond issue is in addition to its proposed $250 million external commercial borrowing offering.

The banking group is raising the funds to meet the rising needs of its global businesses. It is planning to raise its overseas presence to 36 countries with 70 offices by March 2005.

"Both the foreign currency borrowings will take place in the coming two-three months. The proceeds will be utilised only for international credit needs. There is good credit offtake in almost all markets," said A K Purwar, chairman, State Bank of India. The bank has a $6-7 billion overseas balance sheet.

Last month, ICICI Bank, the country's second largest bank, had also raised $300 million through an overseas bond issue to fund its growth in Singapore.

"Substantial global expansion is the order of the day for the group. We will follow the Indian trade and the Indian diaspora. We expect to open 70 offices in 36 countries by March 2005. We are talking to the Reserve Bank of India and the government of India, after which we will have to talk to the host regulators. In the next two-three years, about 15-20 per cent of our profits should be from international operations," Purwar said.

Currently, SBI has 54 offices across 28 countries and they contribute five-six per cent to the bottomline. From July to July, the bank claims to have made a 60 per cent jump in profits of it overseas operations.

Moreover, SBI is looking at acquisition of banks in Africa and Asia.

The bank wants to compete with the global banks in the times to come with large expansion and IT plans on the anvil.

"Banking is simply value-added IT today. If we can export IT services, why not banking?" Purwar said. He added that the bank's plan to implement an integrated technology platform across markets will put the bank on an equal footing with international banks.

Finacle to integrate global operations: Meanwhile, the bank today announced that it would be spending $35 million to technologically integrate its global operations with Finacle, the banking solution of Infosys Technologies.

The banking group is attempting to integrate and centralise the operations across 20 countries. This would enable an SBI customer to access his/her domestic account at any of the group's overseas branches. Finacle will offer core banking services, internet banking and treasury solutions across SBI group's network.