Public sector lender State Bank of India has received an in-principle nod from the Reserve Bank of India (RBI) to set up a new subsidiary to manage its non-banking activities, primarily real estate.
State Bank's deputy managing director and corporate development officer Ashwini Mehra says the subsidiary will be set up by the end of the year and operations should begin early next year.
Sources say the bank has roped in KPMG as an advisor to set up the new subsidiary, which will look at all the real estate activities. This arm will provide transactional, advisory and managerial services to the bank.
Below is the transcript of Ashwini Mehra’s interview with Sonia Shenoy and Anuj Singhal on CNBC-TV18.
Anuj: If you could tell us the total market value of State Bank of India’s (SBI) real estate.
A: Actually, the value of the real estate that we have on our books, the book value is about Rs 2,000 odd crore. It is in excess of Rs 2,100 crore. The market value would be in the range of the last valuation that we did was about a year ago in the range of about Rs 23,600 odd crore.
Sonia: By when will you set up the subsidiary? When will you complete this process?
A: Try and set up the subsidiary company by the end of this year, start its operations in a small way early next year and to have the all-India spread of its operations by March 2017. That is what we have on the books right now.
Sonia: Do you have any plans to eventually sell or monetise any part of this subsidiary?
A: No, in fact, in terms of the RBI approval also, we have only to do a transactional as well as the managerial and advisory services that we can get out of this subsidiary. We cannot either hive off any of the assets to this subsidiary or utilise their services for selling any of these properties. It will be only within the bank that they will be housed and also the properties that are on lease with the bank which is a like amount of another 44,000 million odd square feet that we have with us. That is where we will be actually looking to them to help us manage the leases of those properties more efficiently.
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