The board of State Bank of India (SBI) cleared the proposed merger of five associate banks and Bharatiya Mahila Bank (BMB) with itself, taking one step closer to creating the first Indian lender to rank among the world’s top 50.
India’s largest lender also approved the share swap ratio for merging three associates—State Bank of Bikaner and Jaipur (SBBJ), State Bank of Mysore (SBM) and State Bank of Travancore (SBT)—and BMB. Swap ratios for State Bank of Hyderabad and State Bank of Patiala were not announced.
According to the plan approved by the board, investors in SBBJ holding 10 shares will get 28 shares of SBI. Investors in SBM and SBT holding 10 shares will get 22 SBI shares each. Shareholders in BMB with 100 crore equity shares will get 44.2 million shares of SBI.
SBI had seven associates, of which it merged two—State Bank of Saurashtra and State Bank of Indore—with itself over the last 10 years.According to Reliance Securities, swap ratio was largely in line with its expectation. "We expect stock price of SBM would correct by 10-12 pecent and envisage marginal rise in stock prices of SBBJ & SBT. Notably, we do not expect any major price action in SBI counter as the swap ratio being largely neutral."
