State Bank of India (SBI) will not need Competition Commission of India (CCI)’s approval for merging 5 associates and Bhartiya Mahila Bank (BMB) with itself.
As per the amendment to the Competition Act 2002, consolidation in the banking sector space is exempt from the approval of CCI.
The board of SBI approved scheme of merger of five associate lenders State Bank of Bikaner & Jaipur (SBBJ), State Bank of Mysore (SBM), State Bank of Travancore (SBT) and Bharatiya Mahila Bank (BMB) with itself while protecting the interest of the existing staff.
The consolidated entity will add Rs. 8 lakh crore (about USD 120 billion) to SBI’s assets and consolidated entity will get catapulted into the top 50 banks globally.
The bank has taken a big step towards the first-ever large scale consolidation in the Indian banking sector by deciding to merge all its associate and BMB to create a banking behemoth with a network of more than 24,000 branches, 2,70,000 employees and total assets of Rs. 30 lakh crore, an increase of 36 per cent.
Merger will create a global sized bank with an asset base of Rs. 30 lakh crore.
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 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.
SBI first merged State Bank of Saurashtra with itself in 2008. Two years later, State Bank of Indore was merged.