SBI ACQUIRES MAURITIAN BANK FOR
$10 MN
In a first-of-its kind deal, the State Bank
of India (SBI), the country’s largest bank, has acquired
the control of Indian Ocean International Bank, a Mauritius-based
category-one bank.
The deal marks the first buyout of an overseas
bank by a domestic one. In a notice to the BSE on Thursday,
the SBI said it has acquired over 51% in the Mauritian bank
for a consideration of $10m. Industry sources said SBI bought
the stake from a number of shareholders through a private
deal.
“The bank has acquired the stake from
some 930-odd shareholders,” they said.
Indian Ocean International Bank has a market
share of 7% in Mauritius and has a limited network of 10 branches
and 10 ATMs. SBI already has a presence in the island nation
through an offshore banking entity called SBI International
(Mauritius).
Although this entity can raise deposits and
advance loans denominated in dollars, it cannot undertake
any domestic banking business. The acquisition will help SBI
undertake domestic business as well.
Mauritius has 20 commercial banks, besides
the 14 non-banking finance companies. “Following the
acquisition, SBI will get an entry in the Mauritius banking
sector with a 7% market share for $10m
Alternatively, it would have to invest close
to $5m for a banking licence as the initial capital stipulated
by the regulator, which would mean starting from scratch,”
said market sources.
“Some Indian banks that are in Mauritius
have taken 40 years to gain a market share of 2%,” they
added.
Indian Ocean International Bank is the fourth-largest
in terms of market share, after Mauritius Commercial Bank,
State Bank of Mauritius and Barclays. Sources said while the
Reserve Bank of India has given an in-principle approval for
the deal, the Bank of Mauritius, too, has cleared it.
SBI had been scouting around for an acquisition
in Africa too.
Sources said SBI’s deputy managing
director BD Sumitra, who is in charge of international banking
and Bharati Rao, chief general manager in charge of international
banking, have signed the agreement in Mauritius.
SBI’s investment banking arm —
SBI Capital Markets had done the due diligence for the parent
bank for this deal.
