The Union Cabinet today approved the merger of five associate banks with the State Bank of India proving that the government moves forward to consolidate the country’s struggling public sector banks.
The successful merger puts SBI’s combined asset at Rs 37 lakh crore (approximately $550 billion), making it one of the world’s 50 largest banks. The five associate banks are the State Bank of Bikaner and Jaipur, the State Bank of Travancore, the State Bank of Patiala, the State Bank of Mysore and the State Bank of Hyderabad.
According to Siddharth Purohit of the brokerage Angel Broking, SBI will not have any asset quality problem with the merger and can gain more access to the subsidiary bank. Arundhati Bhattacharya, chairman of SBI, also said that the merger would multiply SBI’s reach, increase its network and bring more benefits to the customers. The State Bank of India now can compete with the big banks with its large network of 22,500 branches and 58,000 ATMs globally.
State Bank of India poises to be one of largest banking organisations in the world with the merger of State Bank… https://t.co/iHUu3fTI7i
— BHOLANATH RINDANI (@bprindani) June 16, 2016
Merger of State Bank of India Group is not only #corpgov issue, it will also end yet another mark of various Princely States.
— Aishwarya M Gahrana (@AishMGhrana) June 16, 2016
Following the merger news, shares of the three listed associate banks jumped 20% and SBI shares went up 3.9%. 50,000 employees of these associate banks went on strike last month to protest the merger. However, there was no issue with staff integration until now according to the Managing Director of State Bank of Travancore CR Sasikumar.
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