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Merger of SBM, SBI to be smooth
April, 19th 2011

The proposed merger of the State Bank of Mysore (SBM) with State Bank of India (SBI) should be smooth on the back of various synergies between the two public sector lenders in the form of similar business philosophy, technology platform among others, a top SBI official said.

Our technology platform, business philosophy and work cultures have a lot of similarities. So, the proposed merger of SBM with SBI should be smooth in creating value for all stakeholders, R Sridharan, managing director and group executive (associates and subsidiaries), said on the sidelines of a function here.

He, however, said the government would take a final call on the merger with the parent.

Earlier, finance ministry informed the standing committee on the finance the largest lender of the country, SBI plans to consolidate the remaining five associate banks with itself in the next 12-18 months.

The SBI has merged two of its associates namely State Bank of Saurashtra and State Bank of Indore in last two years. While State Bank of Saurashtra came under the fold of SBI in August, 2008, State Bank of Indore merged with the parent last year.

After the merger, SBI is left with five associate banks namely , State Bank of Bikaner and Jaipur, State Bank of Travancore, State Bank of Patiala, State Bank of Mysore and State Bank of Hyderabad.

After the merger of two associate banks with SBI, we have enough experience to deal with merger of both listed and unlisted associates. I hope, this will come handy in case of other mergers also, Sridharan said.

Referring to concerns raised by the state regarding the merger of SBM with its parent, Dilip Marvinkurve, managing director of SBM, said that the merger of SBM with SBI would not affect government business in the state.

The majority of government business is done by the State Bank of Mysore, State Bank of Hyderabad and State Bank of India. As these banks have high levels of synergy in operation, government business will not be affected by the proposed merger, he said.

He, also, said the proposed merger would give maximum benefit to all stake holders.

Presently, over 90 per cent of State Bank of Mysores holding is with SBI, with a public float of around 7.67 per cent by the end of December, 2010.

Given the higher share holding of SBI in State Bank of Mysore, the merger will give economies of scale to the parent, an industry expert said.

State Bank of Mysore has registered a drop in its net profit by 6.5 per cent to Rs 132.04 crore in October- December period of the present financial year on the back of higher provisioning for non-performing assets.

Total income of the bank, however, increased by 16 per cent to Rs 1,154.36 crore during this period over the corresponding period last year due to higher interest income.

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