SBI Receives Approval for Acquisition of 20% Stake in SBI Pension Funds

28 Jun 2023 , 11:44 AM

The Executive Committee of the Central Board (ECCB) has approved the State Bank of India (SBI) to acquire the entire 20% stake held by SBI Capital Markets in SBI Pension Funds, the largest pension fund manager in India.

The stake transfer is subject to regulatory approvals, as mentioned in SBI’s regulatory filing. SBI Pension Funds manages approximately Rs 3,59,040.81 crores of assets under management (AUM), holding a market share of around 37% as of May 31, 2023.

The pension fund also commands over 48% of the AUM market share in the private sector. On the stock exchange, SBI’s share price closed at Rs 565.95 apiece, reflecting a 1.59% increase on Tuesday.

SBI is the largest public sector lender and the second-largest bank in market share, following HDFC Bank. As of June 27, 2023, SBI’s market capitalization exceeded Rs 5.05 lakh crore.

In a separate development, S&P Global Ratings upgraded SBI’s assessment of stand-alone credit profiles (SACPs) by one notch. S&P revised SBI’s SACP to ‘bbb’ from ‘bbb-‘ to reflect lower credit risks and improving earnings, with a projected risk-adjusted capital ratio above 5% in the next 12-24 months.

S&P expects SBI’s return on assets to remain at 0.9%-1.0% over the next two years, supported by contained credit costs amidst a favorable credit cycle in India. The rating agency also anticipates SBI to maintain its market leadership in India’s banking sector, backed by strong funding, liquidity, and customer confidence.

S&P predicts that SBI’s asset quality will outperform the Indian sector average and be comparable to similar-rated international peers, while its capitalization may be weaker compared to Indian private sector banks.

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