SBI Board approves merger of SBS

New Delhi, Aug. 26 (PTI): State Bank of India, the country's largest commercial bank, has started the consolidation process with its associate banks by deciding to merge State Bank of Saurashtra (SBS) with itself.

"This is the beginning of whole group's restructuring. State Bank Of Saurashtra is the smallest of the seven associates and based on the experience we will look at other banks," SBI Managing Director T S Bhattarcharya told PTI.

The boards of both SBI and State Bank of Saurashtra, its wholly-owned subsidiary, have given approval to the merger proposal yesterday.

Bhattacharya said the bank had mandate only for SBS at present and it would shortly seek RBI and government approval.

The other associates are State Bank of Travancore, State Bank of Mysore, State Bank of Bikaner and Jaipur, State Bank of Hyderabad, State Bank of Indore and State Bank of Patiala.

Of these, the first three are listed on the stock exchanges. SBI's controlling interest in the associate banks ranges from 75 per cent to 100 per cent. After SBS, SBI is likely to merge the other three unlisted arms and then follow it up with the listed ones.

SBS has a network of 460 branches and consolidation of the network would help eliminate duplication of branches in the same geographical area. This process would start once the merger gets necessary approvals. Its net profit rose 45 per cent to Rs 87.4 crores in 2006-07.

The bank has paid-up equity capital of Rs 314 crores. The total deposits stood at Rs. 15,804 crores while total advances were at Rs 11,081 crores. The capital adequacy stood at 12.78 per cent as on March 31, 2007.