Shares of State Bank of India (SBI) and associate banks such as State Bank of Bikaner, State Bank of Mysore and State Bank of Travancore rose during Thursday’s trade on the Bombay Stock Exchange (BSE).
Shares of State Bank of India (SBI) and associate banks such as State Bank of Bikaner, State Bank of Mysore and State Bank of Travancore rose during Thursday’s trade on the Bombay Stock Exchange (BSE). Shares gained between 3-13% during intra-day trade after the cabinet approved to merge SBI’s five associates.
Shares of SBI rose 0.65% on Thursday closing the session at R270.40 on the BSE. Additionally, shares of State Bank of Bikaner and Jaipur (SBBJ) surged 3.48% on closing the session at R743, while shares of State Bank of Mysore (SBM) soared 4.66% and shares of State Bank of Travancore (SBT) ended 4.21 % higher at R583.5.
“A formal notification in this regard is awaited from the government of India,” State bank of Travancore said in a statement.According to a plan approved by the board of SBI in August 2016, investors in State Bank of Bikaner and Jaipur holding 10 shares will get 28 shares of SBI. Investors in State Bank of Mysore and State Bank of Travancore holding 10 shares would get 22 SBI shares each. However, State Bank of Hyderabad and State Bank of Patiala are not listed.
The consolidation process of banking in India which was suggested by Narasimham Committee, aims to minimise vulnerability to any geographic concentration risks faced by subsidiary banks. The merger is likely to result in recurring savings, estimated at more than R1,000 crore in the first year, through a combination of enhanced operational efficiency and reduced cost of funds. Existing customers of subsidiary banks will benefit from access to SBI’s global network.