SBI eyes bank acquisition in Indonesia

To expand its operations in Southeast Asia, State Bank of India is on a look out for acquisition of a bank in Indonesia in cash deal not exceeding $100 million (about Rs 450 crore).

Indonesian market provides high growth potential and SBI has identified 2-3 banks for possible acquisition, a senior official of SBI said.

"We are not in favour of giving cash more than $100 million," the official said.

SBI currently has a subsidiary in Indonesia called PT Bank SBI Indonesia with a network of six branches. Last year, the name of PT Bank IndoMonex was changed to PT Bank SBI Indonesia.

Since increasing of branch network would take time, the official said, adding inorganic growth route is easier and quicker way of expansion.

As per the Indonesian law, an entity cannot run two banks simultaneously. The acquirer has takeover only those banks where owner or majority holders should completely exit of the acquired bank and the entity is merged.

The country largest bank, SBI, has 125 foreign offices spread across 23 countries including Singapore, USA, Canada and Mauritius at the end of March 2010.

For the second quarter ended September 2010, SBI net profit grew merely by 0.4 per cent to Rs 2,501.3 crore in the second quarter against Rs 2,490 crore in the year-ago period, owing to higher provisioning for bad assets.