The Hindu Business Line : Merger measures

This is with reference to “Boards of 6 SBI associates to consider merger move on Jan 25” (Business Line, December 26). Merger of banks cannot be prevented in the days to come as it is viewed as a strategy to combat global competition. By the consolidation process, the State Bank of India is expected to become a banking giant.

Unlike other banks, associate banks have the region-specific advantages of playing the dominant banking delivery mechanism with uniqueness in the respective States. Merger synergises such advantages for cost-effective aggressive marketing initiatives in the delivery of products, services and improving the bottomline of the group as a whole and market capitalisation.

The SBI is wholly-owned by the Government and hence the latter must initiate measures to consolidate. There could be mismatch of promotions and career prospects with respect to the SBI and associate banks, but this should not hamper the overall benefits.

The SBI and the associate banks stand to gain in their bargaining strength for the employees from the point of view of the unions and associations and the management. Mergers and consolidations are dynamic and cannot be viewed as a threat.

S. Viswanathan e-mail

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