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Rukmani Vishwanath

MUMBAI, Dec. 23

STATE Bank of India, its associates and subsidiaries are planning to bring in synergies in their treasury operations soon.

This means all the entities in the SBI Group would share information and have common strategies across their forex and rupee treasuries.

The group has 27 associates and eight subsidiaries. The net profit for the group as a whole as on March 31, 2002, was at Rs 3458,53,63 crore.

"The group will share infrastructure, research, technology, non-price sensitive information including perceptions on interest rates,'' said a source.

However, this would not amount to consolidation of treasury operations, the source clarified. The RBI guidelines prohibit a group from consolidating its treasury operations as it can influence market movements.

Currently, SBI controls roughly 30 per cent share in financial markets.

The present move is to have strategies in synergy while the daily `tactics' will remain independent for each treasury. Highly placed sources said that the `treasury group synergy' was part of SBI's master business plan to improve the profitability and marketability for the group as a whole, and is a prelude to the merger of its arms in the future.

Currently, the group entities compete against each other and as a result one's gain is often another's loss. The idea of coming together is to share varied views about currencies, market yields, interest rates and the economy as a whole and use it to the benefit for the entire group, the source said.

"The bank will do everything possible to enhance the profitability of its group under the ambit of an arms length relationship," he said.

The synergies will be achieved in three phases. The bank has chartered short-term, medium-term and long-term plans. The agenda for the short-term plan, expected to be completed by end of January 2003, includes the integration of forex and rupee treasuries within the associates.

The medium-term plan is to standardise infrastructure facilities and human resources for the group. In many cases, the associates have treasuries located in places that are not conducive for operations. "Mumbai is the hub of all activity in financial markets and some dealing rooms may be shifted to locations that are closer," the source said.

The long-term plan included setting up of a common research facility and a possible merger of SBI's arms in two years time, sources said.

Currently, a major part of the group's income comes from treasury operations.

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