All the five associates will merge with State Bank of India from April 1, in the largest consolidation exercise in the banking history of India.
The assets of State Bank of Bikaner and Jaipur (SBBJ), State Bank of Mysore (SBM), State Bank of Travancore (SBT), State Bank of Patiala (SBP) and State Bank of Hyderabad (SBH) will be transferred to SBI from April 1, 2017, SBI said in a regulatory filing.
With the merger of all the five associates, SBI is expected to become a lender of global proportions with an asset base of Rs 37 trillion (Rs 37 lakh crore) or over USD 555 billion, 22,500 branches and 58,000 ATMs. It will have over 50 crore customers.
Officers and employees, with the exception of the board of directors and executive trustees of the associate banks, will become employees of SBI following the merger.
State Bank of India alone has nearly 16,500 branches, including 191 foreign offices spread across 36 countries.
Out of the five subsidiary banks, SBBJ, SBM and SBT are listed.
The board of SBI earlier approved the merger plan under which SBBJ shareholders will get 28 shares of SBI (Re 1 each) for every 10 shares (Rs 10 each) held. Similarly, SBM and SBT shareholders will get 22 shares of SBI for every 10 shares.
The shares of the listed associates will be delisted from stock exchanges following the merger.
SBI had approved separate schemes of acquisition of State Bank of Patiala and State Bank of Hyderabad. There will not be any share swap or cash outgo as they are wholly-owned by SBI.
According to the scheme of merger, the pay and allowances offered to employees or officers of the five associates will not be less than what they would have otherwise drawn.
SBI first merged State Bank of Saurashtra with itself in 2008. Two years later, State Bank of Indore was merged with it.
Once the merger takes effect, existing customers of the subsidiaries will benefit from the access to SBI's global network. It will also lead to better management of high value credit exposure through focused monitoring and control over cash flows instead of separate monitoring by six different banks.
In 2015, Kotak Mahindra Bank completed acquisition of mid-sized private lender ING Vysya Bank for about Rs 15,000 crore. The deal was touted as India's biggest banking merger.
The merger catapulted the nation's fourth-largest private bank to an entity with nearly Rs 2 lakh crore balance-sheet.
With an over 200-year history, SBI has its origins dating back to 1806 when Bank of Calcutta (later called Bank of Bengal) was established. In 1921, Bank of Bengal and two other banks (Bank of Madras and Bank of Bombay) were amalgamated to form Imperial Bank of India.
In 1955, the Reserve Bank acquired the controlling interests of Imperial Bank of India and SBI was created by an Act of Parliament to succeed Imperial Bank of India.
(PTI)
