The Hindu Business Line : No plans for merging other associate banks as of now: SBI

Bhavnagar (Gujarat), Sept. 19 Announcing the formal merger of State Bank of Saurashtra (SBS) with State Bank of India here on Friday, the Chairman of State Bank Group, Mr O.P. Bhatt, said there are no plans for the merger of the other six associates with the bank in the immediate future.

“Some employees of SBS wanted the merger in 1962 itself. It has come 46 years later,” he said, while welcoming the merger.

SBI had received proposals for the merger of four of its associate banks at Saurashtra, Hyderabad, Indore and Patiala. The remaining three — Bikaner and Jaipur, Travancore and Mysore — have public holdings.

The central board meeting of SBI was held at Bhavnagar today to mark the first-ever public sector bank’s merger after nationalisation of banks in the 1970s.

The Union Secretary for Financial Services, Mr Arun Ramanathan, was also present.

“The merger of SBS with SBI has happened because of mutual consent between the employees, officials and management. It is a complicated matter, involving 100-odd processes, not just merger of data and balance sheets but also of heads and hearts. We will wait and watch patiently, for say six months, as to how this merger of the first public sector bank and its associate works out, before arriving at a decision. Unless we have a viewpoint and the banks concerned also have one, we are not going to think about any further mergers,” Mr Bhatt said.

Expansion plans

SBI plans to open 2,000 branches across India, including 100 in Gujarat.

Last year, the bank had added 1,000 branches. The circle head office (CHO) of SBI will continue to be at Ahmedabad.

“There are some business norms to decide where a CHO would be located,” he said at a press conference after the function.

Replying to questions, he said SBI is also thinking of overseas acquisitions but nothing is concrete so far.

The international ranking of the bank has improved from 107 to 57 in the last three years.

The SBS advantage

SBS was originally started in 1902 as Bhavnagar Darbar Savings Bank.

It became SBS in 1959, merging with itself four other banks owned by the then princely State. In 1960, it became a wholly-owned subsidiary of SBI. Essentially a Gujarat-based bank, it brings 461 branches and a business of Rs 19,609 crore to its Ahmedabad circle.

As a result, the circle’s business will improve from Rs 35,741 crore to Rs 55,350 crore, an increase of 55 per cent. SBI’s number of branches will increase to 10,955.

The erstwhile SBS had deposits of Rs 15,216 crore and advances of Rs 12,678 crore. It had a paid-up capital and reserves of Rs 1,029 crore and net profit, as on March 31, 2008 of Rs 51 crore.

At the time of merger, SBS was working with a business turnover of over Rs 27,500 crore and had reported a net profit of Rs 21.01 crore in its operations during the quarter ended June 2008.