SBI proposes merger of 5 associate banks including SBT; unions call nationwide strike for Friday

Wednesday, May 18, 2016,11:02 IST By metrovaartha A A A

Mumbai | Top state-run bank, State Bank of India Tuesday proposed merger of its five associate banks, including State Bank of Travancore, and newly created Bharatiya Mahila Bank (BMB) with itself, a move that will create Rs 37-lakh crore banking behemoth with over 50 crore customers.


After a hurriedly called board meetings of State Bank of India as well as its associate banks, SBI said it has sought government approval for the merger. But employee unions threatened to go on a nationwide strike on Friday against what they termed as the arrogant attitude of the parent.


This merger discussion is purely exploratory at this stage and not certain. A proposal seeking an in-principle approval to start negotiations with associate banks will be submitted to the government, SBI said in a statement issued late evening after the board meeting which was attended by RBI deputy governor Urjit Patel and financial services secretary Anjuly Chib among others. The proper merger will consolidate our group, make us more efficient and will be of great value to our all stakeholders, SBI chairman Arundhati Bhattacharya told news channels after the board meeting. She further said the merger will create immense benefits through operational synergies. For instance, the cost of fund alone will come down by 100 bps. She further noted that the five associates are sitting on Rs 4,000 crore of fixed assets, which will add to the core capital under the new RBI norms. Out of these around Rs 2,000 crore in real estate alone, she said.


On the incremental cost side, she said, the merged entity will need Rs 23 crore a month on superannuation provisions, which the chairman termed as nothing. After the 2010 merger of State Bank of Indore, the nation’s largest bank has been saying it would merge others as well but none of its moves were fructified due to lack of capital (which was pegged at least Rs 2,000 crore each for per bank) and stiff opposition from employee unions.


The five associate banks that will be merged are State Bank of Bikaner & Jaipur, State Bank of Hyderabad, State Bank of Mysore, State Bank of Patiala, and State Bank of Travancore. It also wants to take over the newest state-run bank women-oriented lender Bharatiya Mahila Bank.

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