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Wednesday, May 18, 2016

SBI proposes merger of 5 associate banks

The country’s largest lender State Bank of India (SBI) on Tuesday proposed merger of six banks (5 associate banks and Bhartiya Mahila Bank) with itself. The merger will create Rs 37 lakh crore banking behemoth with over 50 crore customers. The merger will also improve SBI’s ranking among the global banks and its global ranking will go up to 55 from 59 in terms of balance sheet size.

State Bank of India said that the move is to prepare itself to take competition head on with 21 niche banks (11 payment banks and 10 small finance banks) ready to launch operations this year.

This came as a surprise to investors and analysts as the bank management in the past had been vocal in opposing a merger. Besides two universal banks, Bandhan Bank and IDFC Bank have already launched operations. In an earnings press conference in the last several quarters, Arundhati Bhattacharya chairman SBI on a question of merger with associate banks had said, “The time is not correct for a merger with associate banks.”

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