SBI to absorb one of the associate banks in the current fiscal
By Neelima Shankar
Aug 14, 2012
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The largest bank in the country, State Bank of India (SBI) is expected to merge with one of its five associate banks in the current fiscal.

The board of SBI has given a nod to the restructuring activity, and now the bank is deciding which of the banks to merge with. SBI had previously done mergers with State Bank of Saurashtra in 2008, and State Bank of Indore in 2010.

SBI currently has two choices, whether to merge with a listed or an unlisted entity. Merging with an unlisted bank would be easier, as it involves less procedural hassles, but at the same time unlisted banks are much larger. On the other hand listed banks are smaller, but require more procedural issues like swap ratios, and involvement of SEBI.

Listed entities include State Bank of Mysore (SBM), State Bank of Bikaner and Jaipur (SBBJ) and State Bank of Travancore (SBT); while State Bank of Patiala (SBP) and State Bank of Hyderabad (SBH) and are unlisted.

Of all the associate banks, SBM was the only bank which saw a reduced profit growth in Q1FY13, the profits for the bank reduced by 37.5% to 40 crore; whereas rest all the associates saw profits grow with SBP by 87%, SBH by 18% , SBBJ by 31% and SBH by 18%.

At present SBI has a branch network of 20,193 branches along with another 5,096 branches of its associate banks. The bank intends to merge one associate every two years.

Mr. Sharad Sharma, former Chief GM of SBI recently joined the State Bank of Mysore as the new Managing Director. SBI management is looking to increase the profitability of State Bank of Mysore.

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