SBI, five associate banks combine assets in mega merger

In a merger that will create a banking behemoth in the country, State Bank of India has said that the assets of five of its associate banks will be transferred to it from April 1.

“In terms of a Government of India order dated February 22, 2017, the entire undertaking 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) shall stand transferred to and vested in the State Bank of India from April 1, 2017,” SBI informed the exchanges.

When its is completed, the merger will result in a bank which will have assets of over Rs 37 lakh crore ($555 billion), 22,500 branches and 58,000 ATMs. SBI, however, has not given any timeline so far for the merger of Bharatiya Mahila Bank with itself.

The merger of the arms with the parent was supposed to be completed by the end of the current fiscal, but officials had stated that it was likely to get delayed.

“We do not want to take any risks at the annual closing time. So we may look at completing the annual closing first and then look at the merger,” SBI chairman Arundhati Bhattacharya had said early last month.

SBI had approved the merger of the five associate banks with itself in August. The Union cabinet, chaired by Prime Minister Narendra Modi approved the acquisition by the State Bank of India of its subsidiary banks on February 15.

According to the government, the merger is likely to result in recurring savings, estimated at more than Rs 1000 crore in the first year, through a combination of enhanced operational efficiency and reduced cost of funds.

The acquisition of subsidiary banks of SBI is in pursuance of the government’s Indradhanush action plan. It is expected to strengthen the banking sector and improve its efficiency and profitability, the government had said while giving its approval to the merger.