State Bank of India approved a merger plan that will combine the country’s largest lender with three of its units and Bharatiya Mahila Bank Ltd amid a government push to strengthen the nation’s fragmented banking industry.
The Mumbai-based bank will offer 22 shares for every 10 shares of State Bank of Mysore and State Bank of Travancore, an exchange filing showed yesterday. It will offer 28 shares for every 10 shares of State Bank of Bikaner & Jaipur, while SBI will issue 44.2mn shares for every billion of unlisted Bharatiya Mahila Bank Ltd, the filing showed.
Prime Minister Narendra Modi’s government had in June given SBI the nod to start talks to acquire the assets of its subsidiaries and Bharatiya Mahila Bank. SBI, which accounted for about a fifth of India’s outstanding loans as of June 30, has more than 16,700 outlets in the country – about triple the more than 6,000 operated by Wells Fargo & Co, the largest US lender by branches.
Shares of the Indian banking giant, which is 60.2% owned by the government, gained 0.9% yesterday, while its Travancore unit added 1.1%. State Bank of Mysore rose 2% and the Bikaner unit climbed 3.4%. SBI chairperson Arundhati Bhattacharya said in June that the merger was a “win-win” for the lender and its units, citing expected cost savings. The 210-year-old lender has acquired two of its other units - State Bank of Indore and State Bank of Saurashtra – in the last decade. India’s banking system has more than 90 domestic and foreign lenders competing for $1.4tn of deposits.