SBI to Finance Indonesia-India Trade

JAKARTA -- State Bank of India, India's largest lender by assets, will serve as a foreign exchange bank to facilitate trade between India and Indonesia, handling about $350 million initially, an executive at the bank said Tuesday.

Subramanian Sathyamurthy, operations director at local unit PT SBI Indonesia, told Dow Jones Newswires that trade between India and Indonesia last year was worth $10 billion.

Given that SBI handles about 35% of total foreign exchange business in India, its potential market share share of bilateral trade between the South and Southeast Asian nations could eventually be $3.5 billion annually, Mr. Sathyamurthy said.

"Of this $3.5 billion, we aim to garner about 10% initially, which is a decent sum to start with," he said.

Mr. Sathyamurthy said SBI Indonesia previously functioned as a local bank but was given a license this week by Indonesian regulators to operate as a foreign exchange bank. The lender has been seeking such a license for several years.

India is a major importer of Indonesian export goods such as crude palm oil and coal. However, many export transactions are conducted via third parties in Singapore, as there are few local financial houses that specialize in trade and services between the two countries.

Officials at SBI Indonesia, which until last month was named PT Bank IndoMonex, have told local media previously that the bank would be able to offer trade finance and advisory services to Indian companies doing business in Indonesia, as well as remittance services to the Indian expatriate community here, which numbers about 10,000.

SBI owns 76% of SBI Indonesia.

SBI Indonesia has 10 branches in major Indonesian cities, and has said it plans to open more branches in years to come.

Mr. Sathyamurthy declined to comment on a media report Tuesday that said SBI is considering buying another bank in Indonesia, saying he had no knowledge of the matter.

India's The Economic Times reported that SBI is in talks with Indonesia's PT Bank Eksekutif Internasional to acquire a majority stake in it as a strategic investment.

Bank Eksekutif has 13 branches in Indonesia and 491 employees, the report said.

Source: online.wsj.com