New Delhi, Aug 5: State Bank of Mysore is keen on reducing the face value of its shares to Rs 10 from Rs 100 before tapping the market with a public issue. SBM wants to ensure liquidity to investors by reducing the face value. The SBI subsidiary which listed its shares on the Bombay Stock Exchange in June, may not be in a position to come with the public issue this fiscal pending amendment to the SBI Subsidiaries Act. The amendment to the act will enable the bank to reduce the face value of its shares to Rs 10.The poor performance of the other two SBI subsidiaries on the stock markets post-issue seems to have influenced SBM to tread the path cautiously. The shares of State Bank of Travancore and State Bank of Bikaner and Jaipur are trading well below their offer price marke by very low trading volumes. The face value of Rs 100 per share of these two banks is seen as a major stumbling block in terms of liquidity.
Says an official of SBM, ``We are actively considering to reduce the face value of SBM shareto Rs 10 for which an amendment is required in the SBI Subsidiaries Act. The amendment will allow us to reduce to the face value and the investment cap of 200 shares will be removed. We do not see this coming through in the near future and we may even extend the issue to the next fiscal.''
Post-listing on BSE, SBM itself with a face value of Rs 100 is hardly traded on the exchange. Also the bank has received several requests from the public to reduce the face value to Rs 10.
Preparing the ground for its public issue of equity shares, SBI had listed shares on June 4 at Rs 375. The scrip, which was traded only once in June, has been on a steady fall. In July, the scrip traded six times and slipped to a low of Rs 275. On August 3, the share further plunged to Rs 256 with a volume of only 25 shares. With less than 4 per cent public holding in the bank, the floating stock of the bank is very low at around 1.4 lakh shares. The performance of the bank for the first quarter could also be one of the reasons behindthe bank's decision to delay the issue. SBM has registered a net profit of Rs 50.54 crore in the first-quarter, up 25 per cent from Rs 40.24 crore in the corresponding period of previous year. However, operating profit has declined by 2.53 per cent. Poor credit offtake and pressure on interest spread took their toll on the bank's performance.
The bank's main worry is its non-performing assets, which have marginally declined to 10.75 per cent from the previous level of 10.96 per cent, which is still high. The capital adequacy ratio of the bank is around 10.7 per cent. According to the official, the bank will have to tap the market in the next fiscal even if the SBI Subsidiaries Act is not amended. With branches of more than 500, SBM is mainly concentrated in Karnataka.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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