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Friday, March 18, 2005

Two SBI card JVs may merge (Financial Express)

Two SBI card JVs may merge
(Financial Express)
OUR BANKING BUREAU
Posted online: Tuesday, March 15, 2005 at 0000 hours IST

MUMBAI, MARCH 14: SBI Cards & Payment Services Ltd (SBI Cards) and GE
Capital Business Process Management Services Ltd (GECBPMS) are likely
to merge. Both these entities have been set up by the State Bank of
India and GE Money as joint ventures (JVs).

SBI Cards, which focuses on marketing and distribution of the SBI
credit card, is a 60:40 JV between SBI and GE Money. GECBPMS, which
handles technology and processing needs of the SBI credit card, is a
60:40 JV between GE Money and SBI.

“Talks between SBI and GE Money on merging SBI Cards and GECBPMS are at
a preliminary stage. Both JVs, which have been set up to develop SBI’s
payments card business, are under one CEO and their control functions
are also aligned,” said Ashok Kini, managing director & group executive
(national banking), SBI, after the launch of SBI Social card.

When asked as to how much stake each JV partner would hold after the
two entities are merged, Mr Kini said, details had not been worked out
as yet.

He, however, did not foresee any difficulty or conflict of interest for
the JV even if GE makes a foray into retail banking in India.

Mr Kini also sidestepped a question as to whether SBI is planning to
convert its Global Depository Receipts (GDRs) into American Depository
Receipts (ADRs), saying it was a ’sensitive issue’.

It may be pertinent to note that SBI is planning to be compliant with
the US Generally Accepted Accounting Principle (GAAP) and its financial
statement for financial year 2004-05 is expected to reflect this.

By converting GDRs into ADRs, SBI is seeking to gain mileage by way of
increased visibility and trading.

Meanwhile, the credit (affinity) card that SBI launched on Monday
features four non-governmental organisations - the Cancer Patients Aid
Association, the National Association for the Blind, SOS Children’s
Villages of India and WWF India - as beneficiaries on a single credit
card.

According to Roopam Asthana, CEO, SBI Cards, cardholders can donate to
the four NGOs at the same time by simply using the card as they
normally do.

Under the arrangement, SBI Card will donate 20% of the annual/renewal
fees of Rs 750 to these NGOs as well as a sourcing fee of Rs 250.
Reward points accruing to the credit card on account of its usage will
be automatically donated by SBI Card to these NGOs.

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