The largest Indian public sector lender’s move is likely to create a global-sized bank with an asset base of Rs 30 lakh crore. The acquisition is exempt from the approval of CCI under the Competition Act 2002, according to informed quarters.
As per the amendment to the Competition Act, consolidation in the banking sector space is exempt from the approval of CCI, they clarified.
The board of SBI recently approved the scheme of merger of five associate lenders — State Bank of Bikaner & Jaipur (SBBJ), State Bank of Hyderabad, State Bank of Mysore (SBM), State Bank of Patiala and State Bank of Travancore (SBT), and Bharatiya Mahila Bank (BMB) with itself, while protecting the interests of the existing staff.
The consolidated entity will add Rs 8 lakh crore ($120 billion, approximately) to SBI’s assets and consolidated entity will get catapulted into the top 50 banks globally.
The SBI is making a big stride towards the first-ever large-scale consolidation in the Indian banking sector by deciding to merge all its associate and Bharatiya Mahila Bank to create a banking behemoth with a network of more than 24,000 branches, 2,70,000 employees and total assets of Rs 30 lakh crore, an increase of nearly 36 per cent.
India’s second-largest lender ICICI Bank post this merger will be almost one-fourth of SBI, in terms of total deposits and advances, it said. The mergers will catapult the bank into top 50 banks globally and is in furtherance of the bank’s mission statement to serve in the remotest parts of the country.
As per the merger proposal, SBBJ shareholders will get 28 shares of SBI (Rs 1 each) for every 10 shares (Rs 10 each). Similarly, SBM and SBT shareholders will get 22 shares of SBI for every 10 shares.
There will not be any share swap or cash outgo as SBH and SBP are wholly-owned by the SBI.
In case of Bharatiya Mahila Bank, 4,42,31,510 shares of SBI will be swapped for every 100 crore shares of face value of Rs 10 each.
SBI first merged State Bank of Saurashtra with itself in 2008. Two years later, State Bank of Indore was merged.