Paving the way for the creation of a bank of global size, State Bank of India’s board has approved merger of five associate banks and Bharatiya Mahila Bank (BMBL) with SBI.
The central board of directors of SBI has accorded their approval to the scheme of acquisition of the State Bank of Bikaner & Jaipur (SBBJ), State Bank of Mysore (SBM), State Bank of Travancore (SBT) and Bharatiya Mahila Bank Limited (BMBL) by the State Bank of India, SBI said in a BSE filing on Thursday.
The bank later announced that the board has also approved separate schemes of acquisition of State Bank of Patiala (SBP) and State Bank of Hyderabad (SBH) with SBI.
As per the merger proposal, SBBJ shareholders will get 28 shares of SBI (Rs 1 each) for every 10 shares (Rs 10 each). Similarly, SBM and SBT shareholders will get 22 shares of SBI for every 10 shares. In the case of Bharatiya Mahila Bank, 4,42,31,510 shares of SBI will be swapped for every 100 crore of Rs 10 each. Last month, the Union Cabinet had cleared merger of all the five associate banks of SBI with the parent and acquisition of BMBL.
However, there will not be any share swap or cash outgo as SBH and SBP are wholly-owned by the SBI.
As per the merger proposal, the pay and allowances of the staff of the merging bank will be protected and “shall not be less favourable overall as compared to what they would have drawn”. The benefits of the retired employees will be protected, it said.
With merger of all the five associates and BMBL, SBI will become a global-sized bank and could compete with the largest in the world, with an asset base of Rs 37,00,000 crore or over $555 billion, with 22,500 branches and 58,000 ATMs. It will have over 50 crore customers. SBI has close to 16,500 branches, including 191 foreign offices spread across 36 countries.
SBI first merged State Bank of Saurashtra with itself in 2008. Two years later, State Bank of Indore was merged. On Thursday, the SBI stock closed at Rs 248.20, up 0.79 per cent on BSE. SBBJ shares ended the day at Rs 673.30 a piece, up 3.49 per cent while those of SBM were up 2.06 per cent at Rs 621.70. State Bank of Patiala and State Bank of Hyderabad are not listed on the bourses.
SBI had earlier said the corporate branches of its five associate banks will “fold up” into the parent bank as part of network rationalisation after their merger. As much as 60-70 per cent of the larger value accounts are common and SBI needs only one relationship manager for that, said an official.