State Bank of India to merge five of its associate banks from April 2017
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In what can be called as the biggest consolidation in the history of Indian banking, State Bank of India will be merging five of its associate banks from April 1, 2017. Once the complete merger takes place, State Bank of India is expected to become of the largest global banks. Bloomberg ranked the bank at number 52 in terms of the asset base in the year 2015. With the merger, the bank is expected to break in the top 50 league.
The associate banks include the likes of State Bank of Mysore (SBM), State Bank of Bikaner and Jaipur (SBBJ), State Bank of Hyderabad (SBH), State Bank of Travancore (SBT), and State Bank of Patiala (SBP). Out of these five banks, State Bank of Hyderabad and State Bank of Patiala are not listed on the stock exchange.
The government issued a gazette notification on Thursday, February 23, 2017, stating that all the shares of five associate banks will cease to exist and will be transferred to State Bank. As per the notification, the shares of the three listed associate banks will be delisted in effect from April 1, 2017. In the case of the other two banks, the share capital will stand to be canceled.
The merged entity is bound to emerge out as a banking giant having an asset base of ₹ 37 lakh crore. It will also have a wide network of about 22,500 branches and 58,000 ATMs. This will increase the dominance of SBI in the banking industry. As a matter of fact, SBI had completed a merger with State Bank of Saurashtra in the year 2008. In 2010, State Bank of Indore was merged with the bank as well.
The merger of SBI and its associate banks is expected to strengthen the banking sector of India through the amalgamation of public sector banks.