RETAIL BANKING | Tony Chua, Korea

State Bank of India has $354mn direct exposure to EU market

Yet the state-run lender stressed that it has no exposure to the region’s sovereign bonds.

State Bank of India (SBI), the country’s largest lender, has a $353.6 million direct exposure to the euro zone area. This includes letters of credit or guarantees provided to various banks and trade finance to Indian exporters and importers in the euro zone area.

However, the bank has no exposure to sovereign bonds in the region.

The highest exposure is to Italy, where the bank has an exposure of $170 million in trade finance and in letter of credit to an Italian bank, Credito Italiano. In Spain, SBI’s exposure is $145 million, again in trade finance. In Ireland, it is $37 million, while in Greece, it is the lowest at $1.6 million, said Hemant Contractor, managing director of SBI’s international banking division, who detailed out the bank’s overseas exposure in an earnings call after the announcement of its June quarter results on Saturday.

“But there is no need to present a doomsday scenario on these exposures as these nations have done everything possible to keep their banks solvent. So even in the worst case, the banks would be the last to be impacted,” SBI chairman and managing director Pratip Chaudhuri said at the earnings call.

SBI’s international book stands at $30 billion, of which $12 billion is in trade finance, which is very short term with a duration of six months, which is self-liquidating.

View the full story in The Financial Chronicle.

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