SBI Board Approves Restructuring Of Capital Markets Division On Regulatory Concerns
SBI Capital Services Ltd., the investment banking arm of State Bank of India, will no longer provide debt syndication and debt resolution services, the bank said in a stock exchange notification.
At a board meeting of SBI on Tuesday, the lender decided to approve the restructuring of its capital markets division. As part of this, SBI Caps will discontinue services which are also being provided by the bank, to avoid overlaps. 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.SBI Statement To Exchanges
SBI Caps will continue to offer other investment banking services.
On April 14, The Economic Times had first reported that the Reserve Bank of India had raised concerns regarding conflict of interest due to the services offered by SBI Caps. The possibility of a conflict emerged from the fact that SBI Caps was restructuring a number of corporate cases where lenders, including its parent firm, were involved.
In May, SBI Chairman Rajnish Kumar had stated that the bank was looking at ways to reduce overlap of services between SBI and SBI Caps. Kumar had told reporters at the time that SBI Caps would become a pure investment bank and that the lender may look to bring in a partner for the investment banking division at a later stage.