The State Bank of India’s quest for buying a bigger bank than those it has been picking up globally for the past two years seems to have come a cropper. The country’s largest bank has just been ousted from the race to pick up China’s DBD Bank.

SBI had undertaken the due diligence of the Shanghai-based bank, which has a large SME business base, and had found it to be a good buy. SBI, which already has a branch in China, was keen on expanding its base in the region.

According to international investment banking sources, the price offered by SBI fell short of the qualifying quote of $150 million in the first phase of bidding. The bank had quoted over $110 million for the bank.

“With the pricing the bank has offered, SBI has not qualified for the second round of bidding,” said a source.

O.P. Bhatt, chairman, SBI, had said acquisition of small banks involved considerable costs towards meeting regulatory requirements. This was regardless of the size of a bank, he noted.

“Rather, a $200-500-million or a $1-billion bank with around 20 branches or so is something worth picking up,” he said. The bank recently acquired majority 76 per cent stake in Indonesia’s PT Bank IndoMonex for a modest $5 million. However, the bank is mulling abandoning its plans for taking over Kenyan Giro Bank. SBI has presence in 34 countries.