In a bid to create a global sized bank, the board of State Bank of India today approved the scheme of merging five associate lenders and Bharatiya Mahila Bank (BMB) with itself while protecting the interests of the existing staff.
SBI said in a regulatory filing to stock exchanges that,
The central board of directors of SBI has accorded its approval to the scheme of acquisition of the State Bank of Bikaner and Jaipur (SBBJ), State Bank of Mysore (SBM), State Bank of Travancore (SBT), and Bharatiya Mahila Bank Limited (BMBL) by the State Bank of India
Later, in an update, it also approved separate schemes of acquisition of State Bank of Patiala (SBP) and State Bank of Hyderabad (SBH) with SBI. 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 the 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. As per the merger proposal, the pay and allowances of the staff of the merging bank will be protected and "shall not be less favourable overall as compared to what they would have drawn."
Also, benefits of the retired employees will be protected, it said. According to financial experts, this is considered to be the first-ever large-scale consolidation in the Indian banking industry. A month ago, the government gave the go-ahead to the merger of SBI with its five associate lenders and Bharatiya Mahila Bank.
A few days ago, State Bank of India and Brookfield Asset Management had set up a joint venture with an initial commitment of over $1 billion to make investments in businesses with stressed assets.