Five associate banks of State Bank of India (SBI) will merge with SBI from April 1 in the largest consolidation exercise in the banking history of India.
The assets of State Bank of Bikaner and Jaipur (SBBJ), State Bank of Mysore (SBM), State Bank of Travancore (SBT), State Bank of Patiala (SBP) and State Bank of Hyderabad (SBH) will be transferred to SBI from April 1, 2017, SBI said in a regulatory filing. “The entire undertaking of SBBJ, SBM, SBT, SBP and SBH shall stand transferred to and vested in the State Bank of India from April 1, 2017,” SBI said following a government order.
The government issued five orders to effect the merger on Wednesday. Officers and employees, with the exception of the board of directors and executive trustees of the associate banks, will become employees of SBI following the merger.
Watch | From April 1, Five Associate Banks Will Merge With SBI
With the merger of all the five associates, 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. Five associate banks have an employee base of 73,268. The five associate banks have a total deposit base of over Rs 5 lakh crore and ATMs of 8,964 across India.
SBI first merged State Bank of Saurashtra with itself in 2008. Two years later, State Bank of Indore was merged.
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 needed only one relationship manager for that, an official had said.
While SBI has not yet revealed the branch or staff rationalisation plan, an official of State Bank of Travancore last week said the merger plan could lead to closure of SBT’s 30 per cent of branches. While the five associate banks have 6717 branches, SBT has 1117 branches. The five associate banks are likely to make a voluntary VRS offer to their staff.
In a statement last week, SBI said, “the merger will result in creation of a stronger entity. This will minimise vulnerability to any geographic concentration risks faced by associate banks. This merger is an important step towards strengthening the banking sector through consolidation of public sector banks.”