News: Merger of associates with SBI not in near future

(BL 18/04/2007) New Delhi - The Ministry of Finance has ruled out any immediate plans for a merger of four associate banks of the State Bank of India with the parent bank.

Officials said that contrary to speculations, there was no such proposal pending before the Government or SBI at present.

"There is no proposal with the Government to merge some of the associate banks of SBI. There is also no such proposal before the board of directors of SBI," said a senior finance ministry official, who is also privy to the deliberations of the SBI board.

Recent reports had suggested that the Government and the SBI were considering a merger of four unlisted associate banks of the SBI while letting the three other listed subsidiaries untouched.

The unlisted associate banks are State Bank of Hyderabad, State Bank of Indore, State Bank of Patiala and State Bank of Saurashtra, while those listed on the stock exchanges are State Bank of Bikaner & Jaipur, State Bank of Travancore and State Bank of Mysore.

Speculation of a possible merger of the banks has met with stiff resistance from the SBI staff.

Expressing their opposition to any such proposal, the All-India State Bank of Officers' Federation had recently said that such a move would be "retrograde step".

It had pointed out that each of the bank serve a particular region of the country and a merger would lead to reduction in the number of branches and "other undesirable effects."

Banks in talks

Officials, however, said that at a broader level, merger of state-owned banks remains on the agenda of the Government. They pointed out that public sector banks are holding talks between themselves to assess the synergies in the event of a possible merger.

"At present, several banks are talking among themselves. They are also trying to explain their point of view to sections within the banks that are opposed to merger of banks. However, no firm proposal has reached the Government yet," the official said.

Though the Government had expressed its desire to see consolidation among public sector banks, political pressures have forced it to go slow in taking any decision on this regard. The Left parties are vehemently against mergers. They also have considerable influents over some of the powerful unions of the public sector banks.