SBI board approves merger of 3 associate banks, BMB
18 August 2016
The board of directors of State Bank of India (SBI), the country's largest lender, on Thursday approved the scheme of merger of three of its five associate banks and the newly-created Bhartiya Mahila Bank (BMB), to create a banking behemoth.
The merger of State Bank of Bikaner and Jaipur, State Bank of Mysore, State Bank of Travancore and the Bharatiya Mahila Bank will leave SBI with combined assets of over Rs37,00,000 crore.
SBI plans to merge all its five subsidiaries, which include the State Bank of Travancore, State Bank of Mysore, State Bank of Bikaner and Jaipur, State Bank of Hyderabad and State Bank of Patiala besides the Bahartiya Mahila Bank.
As per the scheme of arrangement filed with the Bombay Stock Exchange (BSE), SBI will give 28 of its shares of Re1 each for every 10 shares held of State Bank of Bikaner and Jaipur.
It will give 22 shares each for every 10 shares held of State Bank of Mysore and State Bank of Travancore.
SBI will give 4,42,31,510 shares of face value Re1 each, aggregating to Rs4.42 crore, for every billion equity shares of Bhartiya Mahila Bank.
The board approval will kick off the merger process of associate banks like State Bank of Bikarner & Jaipur (SBBJ), State Bank of Mysore (SBM), State Bank of Travancore (SBT) and Bharatiya Mahila Bank Ltd (BMBL) with SBI, under section 35 of the State Bank of India Act, 1955.
Earlier in June, the government had given the go-ahead to SBI for the merger of its five associate banks and Bharatiya Mahila Bank.
With its asset base swelling to five times that of the second-largest Indian bank, ICICI Bank, the merger will see SBI's asset ranking go up in the global list of top banks.
SBI will now submit a detailed plan of merger of its associate banks.
Employee unions of the banks, however, are against the merger and have demonstrated against the move. Nearly a million bank employees observed a day's strike to protest against the merger scheme. (See: Bank staff strike work to protest mergers, privatisation and rising NPAs).
The merger also requires the approval of the scheme by the Reserve Bank of India (RBI) and the government.