SBI board approves merger with associates

August 19, 2016

The board of directors of the State Bank of India (SBI) on Thursday approved the merger of five of its subsidiaries and Bharatiya Mahila Bank (BMB) with itself, the lender said in a regulatory filing. Following the merger, the consolidated balance sheet will increase to Rs 37 lakh crore from Rs 29 lakh crore at present. That will take SBI into the league of the top fifty banks in the world and it will rank 44. Following the merger, government’s stake will fall to 59.70% from 60.18%.

SBI’s market share of the advances and deposits pie will increase to 22% from the stand-alone share of 17% and it will own 18% of the total branch network of the country. Anshula Kant, chief financial officer, SBI, Kant said it was more likely branches would be re-located rather than closed. “We don’t want to destroy any customer value that a branch may have built up,”Kant observed on a television channel.
The five subsidiaries of the bank are State Bank of Mysore (SBM), State Bank of Bikaner and Jaipur (SBBJ), State Bank of Patiala (SBP), State Bank of Travancore (SBT) and State Bank of Hyderabad (SBH). The terms of the merger are such that for every 10 shares of SBBJ, shareholders will get 28 equity shares of SBI. Moreover, for every 10 shares SBM, shareholders will get 22 shares of SBI and for every 10 shares of SBT, they will get 22 shares of SBI. Again, 100 crore shares of BMB will be converted into 4.42 crore shares of SBI. “It will be a line by line merger for our 100% subsidiaries — SBP and SBH,” Kant explained.

Courtesy-The Financial Express

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