The State Bank of India is fine-tuning its organisational structure. It is planning to close its fully owned subsidiary, SBI Commercial and International Bank Ltd, and increase its global footprint manifold.
It will also re-engineer its business processes next year, following the recommendations of consultancy firm McKinsey & Co.
The bank is looking at increasing the number of branches abroad from 49 to 70. With these new branches, it plans to move into 35 countries (it now has a presence in 28).
The entire exercise will be taken up in the next one-and-a-half years. The foreign branches made a net profit of Rs 109.90 crore (Rs 1.099 billion) in 2002-2003.
SBI is opening new branches in Bangladesh, Sri Lanka and the United Kingdom. It plans to enter countries in the Middle East and Africa.
The bank has already submitted an application to convert its representative office in Shanghai into a full-fledged branch.
"We would like to follow the Indian Diaspora. It makes sense for us. We want to become a truly global bank," said a senior SBI official.
SBI is also ramping up its US operations. SBI has a subsidiary in California where it currently has three branches. It plans to increase the number of branches to seven.
SBICI, a two-branch bank, which was earlier planned to be positioned strategically to compete with new private banks, is likely to be merged with one of the seven SBI associate banks.
In 2003, SBICI posted an operating profit of Rs 16.37 crore (Rs 163.7 million) and a net loss of Rs 8.55 crore (Rs 85.5 million).
The loss was on account of heavy provisioning for non-performing assets. In 2002, it posted a net profit of Rs 3.24 crore (Rs 32.4 million).
In March 2003, SBICI had a deposit base of Rs 494.35 crore (Rs 4.943 billion) and advances of Rs 175.87 crore (Rs 1.758 billion).
"It has been decided to close the operations of the bank. The business will be merged with one of the associate banks," said the SBI official.
According to SBI officials, the bank has normally seen increased revenues both from in India and overseas whenever its opens a new branch "We are able to tie up both sides of the trade. This gives a major boost to revenues," officials said.
It is also upgrading its representative office in Moscow to a full-fledged bank. This bank is being floated along with Canara Bank which will hold a 40 per cent stake in the bank.
