SBI board gives approval to merge SBS

27 Aug, 2007, 1458 hrs IST, PTI

MUMBAI: State Bank of India, the country's largest commercial bank, on
Monday said its board has given go ahead to the merger of State Bank
of Saurashtra with itself.

In a communication to the Bombay Stock Exchange, SBI said its central
board on August 25 approved the merger, subject to approval of the
government and Reserve Bank in accordance with State Bank of India
Act, 1955.

SBI scrip rose 5 per cent at Rs 1,540 in morning trade on the stock
exchange.

"This is the beginning of whole group's restructuring. SBS is the
smallest of the seven associates and based on the experience we will
look at other banks," SBI Managing Director T S Bhattarcharya had said
yesterday.

The other associates are State Bank of Travancore, State Bank of
Mysore, State Bank of Bikaner and Jaipur, State Bank of Hyderabad,
State Bank of Indore and State Bank of Patiala.

Of these, the first three are listed on stock exchanges. SBI's
interest in the associate banks ranges from 75-100 per cent. After
SBS, SBI is likely to merge the other three unlisted arms and then
follow it up with the listed ones.

SBS has 460 branches and the merger would help eliminate duplication
of branches in the same area. Its net profit rose 45 per cent to Rs
87.4 crore in 2006-07. The bank has paid-up equity capital of Rs 314
crore. The total deposits stood at Rs 15,804 crore while total
advances were at Rs 11,081 crore.

The merger would help SBI consolidate its position as the country's
biggest bank and widen the gap with nearest rival ICICI Bank. With
9,579 branches, SBI has total assets of Rs 5,66,565 crore and posted a
net profit of Rs 4,541 crore as on March 31, 2007. ICICI Bank had
assets of Rs 3,44,658 crore and posted a net profit of Rs 3,110 crore
in 2006-07.