Standard Chartered Bank is "evaluating" the option of selling shares in India, Neeraj Swaroop, regional chief executive, India & South Asia said on Tuesday.

"We have not made a decision yet. It will depend on many factors, including market conditions, our need for capital and the terms and conditions for the issue," he said.

This is the first time any top foreign banker has come on record on the desire to sell shares locally, though StanChart was always the most likely candidatebecause of its large, very profitable presence in the country.

Last year the bank completed 150 years of operations in India. It currently has 90 branches in 33 cities, and 2 million retail customers, the largest for any foreign bank operating in India.

Besides its home market in London, the bank also is listed in Hong Kong. 2008 results for the bank announced on Tuesday showed that Hong Kong was the single largest contributor to the group's profits with a $1.01 billion profit before tax in 2008.

Interestingly, India was the second largest contributor with a $943 million operating profit, including $146 million from the sale of its mutual fund business to IDFC last year.

Indian profits rose 37%, second only to a 67% rise in profits for Singapore. Hong Kong profits, though largest, shrank by 15%, due to a sharp decline in wealth management.

Analysts say India is a safe bet in the current scenario when profits are mostly shrinking. There is also enough growth potential in the economy, so listing here makes sense. India contributes about 20% of the bank's net profit.

Vaibhav Agarwal, banking analyst with Angel Broking, said listing will help the bank expand its business further.

"Listing could give them more capital and greater visibility," he said.

However, the bank may not be in a hurry to list because capital is not a constraint so far. Last year the bank got $500 million of new capital besides the $300 million it retained from the profits here.

The current equity market conditions could also delay the share sale. However, the most crucial factor will be local incorporation.

Share sale in any country can't be done unless the company is incorporated in the country. In India it will mean registering with the registrar of companies.

Ananda Bhoumik, senior director, banking at Fitch Ratings, said listing here could mean the parent group will have to hive off the Indian operations as a subsidiary.

Swaroop said that India is "relatively attractive" compared to other markets, but his bank is also facing challenges here.

Joel Rebello/ DNA-Daily News & Analysis Source: 3D Syndication