The Hindu Business Line : ‘Associates’ response matters more than size’

Mumbai, June 19 The merger of associate banks with State Bank of India will depend more on the response of the leadership of the associate concerned than its size, said Mr O. P. Bhatt, Chairman, SBI.

He was speaking to reporters on the sidelines of the bank’s Annual General Meeting here today.

Mr Bhatt said that there was a need for consensus and if an associate bank’s board was more proactive, that would be considered for the merger process first.

At the AGM, several shareholders raised the issue of mergers of associates, both in favour of and against it.

However, Mr Bhatt’s answer to the query did not throw much light on the way forward.

Regarding the profitability of SBI this fiscal, Mr Bhatt said “It will be the endeavour of the bank to keep NIM close to 2.5 per cent,” he said.

This year banks will have to focus on improving fee income, efficiency and on cutting costs, to offset the reduction in NIMs, he said.

He also ruled out listing of any of SBI’s subsidiaries such as SBI Life Insurance as well as a rights issue, or ADR or GDR by SBI. “There is no desperation for capital because our Capital Adequacy is 14 per cent,” he said.

In his speech, Mr Bhatt said this year the bank is planning to add 1,000 branches and 10,000 ATMs. It is targeting to cover an additional 50,000 villages for providing banking services. The number of rural central processing centres will be raised to 300 by March 2010, from 158 in March 2009.

Bullion branch

Among retail initiatives, there are plans to increase the number of branches selling gold coins to about 1,100. It is also in the process of setting up a dedicated bullion branch to undertake bullion business in a focussed manner.

SBI is in the advanced stage of setting up a general purpose Private Equity Fund jointly with sovereign entities in Oman. The Government of India has designated the bank as the operationalising agency for a similar sovereign fund with Qatar, Mr Bhatt said.

Some other funds with Middle Eastern countries are also in various stages of being set up.

A joint venture with Societe Generale Securities Services for custodial services business is likely to start business during the second quarter of 2009-10.

Similarly, the general insurance joint venture with Insurance Australia Group is likely to start operations in the fourth quarter of 2009-10.

Last year, SBI hired 33,700 staff and officers. This year, a ‘leadership pipeline’ move was initiated where SBI is working with institutions such as ISB, Duke University and IIMs.

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SBI gears up for consolidation, awaits govt green signal
Employees of SBI associates say no to consolidation

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