Mumbai: The government on Thursday said that 1 April will be the record date for the merger of State Bank of India (SBI) with five of its associate banks.
The associate banks are State Bank of Bikaner and Jaipur (SBBJ), State Bank of Mysore (SBM), State Bank of Travancore (SBT), State Bank of Hyderabad (SBH) and State Bank of Patiala (SBP).
In a gazette notification dated 22 February and released on Thursday, the government said that all shares of these associate banks would cease to exist as individual entities and would stand transferred to SBI.
After the merger, SBI is set to be among the top 50 large banks of the world. SBI was ranked 52 in the world in terms of assets in 2015, according to Bloomberg, and a merger will see it break into the top 50.
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In the case of SBP and SBH, which are not listed on the stock exchanges, the notification said that the entire share capital would, without any further act, deed or instrument, stand cancelled. Also, the share certificates representing such shares would also, without any further act, deed or instrument, be deemed to be automatically extinguished.
In case of the other three associate banks, the notification states that the shares would be delisted on 1 April. The shares would be converted to those of SBI, according to the swap ratio approved by the bank’s board and the government.
According to the ratio approved by the board of SBI in August 2016, investors in SBBJ holding 10 shares will get 28 shares of SBI. And, investors in SBM and SBT holding 10 shares will get 22 SBI shares each.
The whole-time directors, including the managing directors of all five associate banks, will cease to hold office and their respective boards will stand dissolved.
In an interaction with reporters on 16 February, SBI chairman Arundhati Bhattacharya said that the consolidated balance sheet of the merged entity would be Rs32 trillion. The merged entity would have deposits worth Rs26 trillion and nearly Rs18.76 trillion worth advances on its books.
The bank would have 23,899 branches and an employee strength of 271,765, according to a report by Press Trust of India.
Bhattacharya clarified that employees of the associate banks would be offered adequate wages in the merged entity.
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“At this point, there are no wage-related issues. The finance minister also asserted that the wages that people receive now will be protected,” she said, adding, “The employees of the associate banks will be offered the wage package that our people have for the relevant grades. It’s up to them to either accept that or retain the package they have now. They have a choice to do that.”
The whole process of merging SBI and its subsidiaries has faced resistance from employee unions fearful of job losses.
At least two associate banks, SBT and SBM, posted a loss for the quarter ended 31 December 2016. These associate banks have also seen their asset quality worsen over the last year after the Reserve Bank of India followed up an asset quality review in October-December 2015 by ordering banks to set aside money against previously unrecognized stressed assets.
