By George Maroes
SBI has gone into major restructuring exercise of its operations in the UK by transforming into a subsidiary named State Bank of India UK Limited from April 1, in compliance with wider ring-fencing of capital requirements by the Bank of England.
The new retail branches of SBI in the UK will fall under a new UK-incorporated banking entity instead of their previous status as overseas branches of the Indian entity.
The SBI is the first overseas bank to race off the blocks after the UK banking regulator Bank of England’s Prudential Regulation Authority (PRA) directed foreign banks a few years ago to move from their retail status as overseas branches to independent entities in order to protect depositors in the UK from volatility of foreign markets.
The Finance Ministry has been keeping its eyes on PSU operations abroad after PNB fraud case. Meanwhile, Bank of Baroda has announced that it was shutting down its operation in South Africa after Gupta scam. The South African Reserve Bank had imposed a fine of Rand 11 million for lapses in compliance against the public-sector bank.
Ring-fencing of day-to-day banking services is one of the reforms brought in by the UK government domestically also, aiming to strengthen the financial system following the financial crisis that began in 2008.
Following the court’s approval on 9 March, Barclays has satisfied this requirement by setting up a new ring-fenced bank, Barclays Bank UK PLC (BBUKPLC), in April, which is separate from Barclays Bank PLC. The two entities operate alongside, but independently from, one another as part of the Barclays Group under the listed entity, Barclays PLC.
Lord Mayor of the City of London, Charles Bowman said: “The State Bank of India is a treasured partner of the City, having first opened an office in the Square Mile back in 1921. I’m therefore delighted the organisation is expanding its operations in London.
“The move is a reflection of the continued strength of UK-India ties, particularly in financial and professional services. I look forward to further building on our 100-year relationship with India’s largest bank.”