The country?s largest bank, State Bank of India (market capitalisation: over Rs 86,000 crore) is planning a stock split. The bank, which is considering a number of capital raising plans?including a follow-on public offer and hiving off 10% in its proposed insurance asset management holding company?is awaiting passage of the SBI Act Amendment Bill before taking a final decision on the stock split.
?We may announce the stock split and the follow-on public offer simultaneously in the next few months. The objective is to generate liquidity for the bank?s shares whose value has gone up substantially,?? said a senior official of the bank. Though specifics of the proposed stock split are yet undecided, the bank could decide on a face value of Re 1 or Rs 2 per share.
SBI?s scrip has posted gains over the past one week, even though overall indices have tumbled. It closed on Monday at Rs 1,681.85, registering a 2.80% gain.
SBI, which went public in 1991 at Rs 100 a share (Rs 10 face value and Rs 90 premium), will be the first bank in the country to split its stock. Market analysts feel the move could be good news for investors. ?It is a prime banking stock and definitely in demand, and any additional liquidity would add value to the market capitalisation of the bank,?? said a banking analyst.
SBI also plans to split the shares of some of its subsidiaries. It has seven associate banks of which only three?State Bank of Travancore, State Bank of Mysore and State Bank of Bikaner & Jaipur?are listed.