Sbi To Take 51% In Broking Arm
State Bank of India has decided to pick up 51 per cent stake in its subsidiary, SBI Securities Ltd, which is slated to start operations from June this year. Confirming the move, SBI officials said that the company will have a paid up capital of Rs 60 crore while the authorised capital will stand at Rs 100 crore.
The entry of a new broking firm will be significant in view of the fact that domestic broking companies are facing tough competition from foreign broking firms. Besides, the volumes in broking business has also come down in the last one year, and the brokerage margins are under pressure.
While foreign investment bankers such as Natwest Markets and Barclays BZW, which earlier planned to open a broking firm, have scuttled the idea, several brokers have surrendered their cards at the National Stock Exchange (NSE).
The seven associate banks of SBI - State Bank of Bikaner and Jaipur, State Bank of Hyderabad, State Bank of Indore, State Bank of Mysore, State Bank of Patiala, State Bank of Saurashtra and State Bank of Travancore - too will hold a combine 15 per cent equity stake in the new broking company of SBI.
Asian Development Bank will hold 24 per cent stake in SBI Securities while it already holds 15 per cent in SBI Gilts and 14 per cent in SBI Capital Markets.
According to SBI officials, The SBI subsidiaries, too, are likely to hold nearly 10 per cent stake in SBI Securities. However, this is still under consideration."
The subsidiaries include SBI Capital Market, SBI Gilts and SBI Asset Management Company.
SBI has already appointed V Krishnan, earlier the general manager-developmental banking with the Ahmedabad branch, as the managing director of the new broking firm.
It has been decided that the trading card of the NSE, owned by SBI Capital Market, will be transferred to SBI Securities. The company will initially service large institutional investors, and gradually spread to the retail segment, said SBI officials.
It may be recalled that in 1995, SBI has appointed international consultants Arthur Anderson to advise it on synergysing operations of SBI Capital Market, SBI Gilts and SBI Securities.
The three companies will work in co-ordination to provide one-stop service to the customers, said SBI officials.
In fact, SBI has already set up a investment banking committee that will work towards greater synergy between the three associates.