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SBI denies any formal proposal to merge associates

LiveMint logoLiveMint 11-06-2014 Dinesh Unnikrishnan

Mumbai: State Bank of India (SBI) said on Wednesday that it hadn’t yet taken up a proposal to merge five associate banks with itself, offering a clarification after chairperson Arundhati Bhattacharya was cited as saying in The Economic Times newspaper that India’s largest lender planned to start the process.

“As regards a news item regarding merger of associate banks of SBI, we clarify that no such proposal has been formally taken up for approval,” SBI said in a notification to the stock exchanges.

Among SBI’s five associate banks, State Bank of Travancore (SBT), State Bank of Bikaner and Jaipur (SBBJ) and State Bank of Mysore (SBM) are listed, while State Bank of Hyderabad and State Bank of Patiala are not.

Following the report, share prices of SBI’s three subsidiaries had surged earlier in the day.

At 2.10pm, SBT was trading 8.43% up at `653.45, SBBJ gained 7.97% to `617 and SBM gained 12.69% to `607.95 on BSE.

SBI gained 0.54% to `2,666.25 per share while the benchmark Sensex lost 0.43% to trade at 25,474.25 points.

SBI shares had risen as much as 2.49%, SBBJ gained as much as 15.5%, SBM gained 20%, while SBT gained 10% earlier in the day.

“While the bank has always had plans to consider merger of the associate banks, eventually, a position which has been stated by the bank from time to time since long, the matter had not been under active consideration for quite some time,” SBI said, adding, “going forward, the bank may examine the merger options afresh, when considered appropriate, but preparation of a possible road map would take a few months.”

The combination of the associates will enhance the asset base of SBI to `21.9 trillion and add 5,658 branches to its 15,143 branches. The combined market share will rise to 24% from 19%, The Economic Times report said.

Bhattacharya was quoted as saying in an interview that the “timing (for a merger) is very conducive now” and that she thought “the time has come or is approaching.”

“We will definitely start looking at this matter,” she reportedly said.

SBT and SBBJ too clarified to the exchanges that there is no proposal to merge presently.

“No such proposal has been taken up for approval/negotiation as of now,” SBT said in a communication to exchanges. There is no such information that has not been announced to the exchanges, which could explain the aforesaid movement in the trading, the bank said.

SBBJ too clarified that “no such negotiations are taking place at the moment.”

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