MUMBAI: In a significant move, State Bank of India (SBI) said its investment banking arm, SBI Capital Services Ltd, will cease to offer debt syndication and debt resolution services, as part of its ongoing business revamping strategy.
On Tuesday, the lender said its board has finally decided to approve the restructuring of its capital markets division, a move first proposed in April, and one which a few other PSU banks objected to.
The RBI too reportedly raised concerns about the possibility of a conflict of interest as SBI Caps was involved in the restructuring of corporate cases where lenders, including SBI, were involved.
SBI Caps will discontinue services that are also being provided by the bank to avoid overlaps, the bank said in a stock exchange notification.
It said that most of these services fall under SBI Caps’ project advisory and structured finance department, which is involved in project advisory, government advisory, mergers and acquisitions, debt syndication and debt resolution services. “ln view of duplication of processes resulting in delays, as also certain regulatory concerns, it is decided that the activities like debt syndication (both greenfield and brownfield projects /refinancing for private sector customers) and debt resolution mandates taken from private sector companies offered by PASF, SBI CAPS, are discontinued,” the statement said.
Earlier, SBI Chairman Rajnish Kumar told Express that SBI Caps would become a pure investment bank and that it may rope in a partner for the investment banking division at a later stage. He said the proposal to merge or hive off SBI Caps’ divisions like loan syndication was as part of its ongoing business revamping strategy and to find synergies. SBI’s project finance division is the lucrative business units within SBI Caps that raked in a plum `383 crore in gross fee income, or nearly 90 per cent of its total income last fiscal.
The investment banking arm was a professionally-run entity and other PSU banks should have conducted their own due diligence before offering a loan, he had said.
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