SBI to raise Rs15,000 cr in FY18; enter global top 50

State Bank of India (SBI) on Wednesday said its board has approved a proposal that would allow the bank to raise equity capital of up to Rs15,000 crore in FY18.

In January 2014, SBI had raised Rs8,032 crore with Life Insurance Corporation of India picking up a big chunk of around 41 per cent of the total shares sold. The shares were priced at Rs 151.76 each and the bank had hoped to raise Rs9,600 crore.

The SBI stock ended Wednesday at Rs277.40, ahead of the late-evening announcement. At this price, the stock - including subsidiaries - trades at 1.2 times price to adjusted book for 2017-18, The Financial Express reports. On a standalone basis, it trades at 1.3 times.

Once the merger with associate banks is complete, SBI's consolidated balance sheet would be approximately Rs35 lakh crore, making it one of the top 50 banks in the world. At the end of December, SBI's standalone balance sheet was Rs25.8 lakh crore.

As of the December quarter of FY17, SBI's total capital adequacy ratio stood at 13.73 per cent, of which tier I capital adequacy ratio was 9.97 per cent.

''We advise that the central board of the bank at its meeting held on March 15 has accorded its approval for raising of equity capital up to Rs15,000 crore during FY18 by way of FPO/rights issue/ESPS/ESOS/QIP/ADR/GDR and any other mode or a combination of these, as may be decided at the opportune time…,'' the bank said in a regulatory filing.

Speaking at an event in Mumbai on Wednesday, SBI chairman Arundhati Bhattacharya said that during the earlier QIP, merchant bankers were gung-ho initially. However, the night before the closing of the QIP, she was informed that that the book was about to fall off. ''Early morning I got on to the phone and spoke to people and somehow by the evening we had managed to stitch together at least 80 per cent subscription and closed the issue,'' Bhattacharya said.

She added she was later informed by a board member that this was since India was then part of the fragile five during the taper tantrum. She explained that the day before the issue, Turkey - also a part of the fragile five - had actually raised its bank rates by 350 basis points (bps), and that the day before that Argentina had done a revaluation of the currency. ''The world as such is connected and people were afraid to put money into another emerging market,'' she explained.