SBI sells 5% in NSE, says will continue to divest noncore assets

In an interview with CNBC-TV18, Rajnish Kumar, MD, SBI, talked about the bank's decision to sell stake in NSE and what it will do with the funds raised.Below is the verbatim transcript of Rajnish Kumar’s interview to Nisha Poddar and Ritu Singh on CNBC-TV18.Nisha: It is a good price that you have got for your stock in NSE and you have got a fair bit of valuation i.e. Rs 4,050 per piece which is a good valuation, a ramp up from what IFCI had sold their NSE stocks at. The buyer is ChrysCapital, could you confirm that and also could you tell us what is the way forward for the rest of the 10 percent stake that you have in NSE? A: We will decide at the appropriate time when the IPO is done. It is a gradual process and bank management will take a call when to divest further. Nisha: You are looking at divesting the rest of the 10 percent stake with SBI in NSE at the time of IPO, you think you will get better valuations than what you have clocked in right now?A: I don’t think we have taken the call. What I am saying is that it is a gradual process of divesting. Partly we have divested and partly we will be divesting at the appropriate time. It could be at the time of IPO or it could be after IPO. Nisha: I wanted to know Rs 911 is a drop in the ocean for SBI in terms of the non-core asset sale that you are planning to do every quarter but what are the other plans that you have in the near future of divestments? A: There are many non-core investments so all the options are being evaluated and wherever we see that we have realised the value or the targeted price, we would like to gradually divest.Ritu: How much will your capital adequacy ratio be bolstered by, currently it is at about 13.12 percent, post the completion of this transaction when you get Rs 911 crore?A: I don’t have the figures readily available and as you have already said that it is not a very large amount, so, impact on capital adequacy may not be very significant. You can make it out clearly that in relation to the capital of the bank this is not a very large amount. Ritu: When we last spoke, even in the AGM it was mentioned recently that the bank would raise about Rs 3,000 crore through divestments in non-core assets. As we were asking you earlier, one of course is NSE where you held 10 percent and now you have divested 5 percent, what are the other non-core businesses that you are looking to sell in this calendar year? Also you have still not factored in your real estate investments as part of tier I capital. Are you likely to take that exercise during this quarter or in the next quarter? A: As I said that as and when there is an opportunity to divest at the right price where we believe that it has realised the full value in terms of its potential price rise or this thing, we divest. Another thing is that as far as capital adequacy is concerned, we have adequate capital and real estate valuation is going on at 45 percent of that can be added to the capital. So whether we will do it or not do it, it will all depend upon the requirement for the capital also because the risk weighted assets of the bank, they have no grown at the pace at which we were expecting. The risk weighted assets have grown by just about 8-8.5 percent. So, just raising the capital and then keeping it ideal is also not a good idea in terms of generating the return from the capital. What it does is whatever non-core assets that we have and the value which we have in the real estate, that is a good cushion and as and when needed we will take a call and take a decision.