Buoyed by the success of the merger of State Bank of Saurashtra with itself, State Bank of India (SBI), the countrys largest bank, on Friday said that it would acquire another subsidiary, State Bank of Indore.

The proposal was approved by the SBI board on Friday, the bank said in a filing with stock exchanges. SBI holds a 98.05 per cent stake in State Bank of Indore, the smallest among its six associate banks.

SBIs latest move comes within a fortnight of Finance Minister Pranab Mukherjees green light to consolidation in the public sector banking space. While a lot of public sector banks have discussed such proposals informally, only SBI has been able to push ahead with mergers.

There are a lot of talks happening. We are talking to the boards (of associate banks). It (the speed of the merger) also depends on the managements of associate banks, SBI Chairman O P Bhatt said on the sidelines of the banks annual general meeting here on Friday.

Last year, SBI had appointed its former Deputy Managing Director Bharati Rao as the advisor for associate banks merger. The advisor has conducted talks with the boards of four associate banks, Bhatt said.

In August 2008, SBI had merged State Bank of Saurashtra with itself and the bank has said that the merger which was seen as a test case has happened without any glitch.

Apart from its six associate banks, SBI has 100 per cent stake in State Bank of Hyderabad and State Bank of Patiala. It is expected to take up the merger of its listed subsidiaries State Bank of Bikaner and Jaipur, State Bank of Mysore and State Bank of Travancore later.

The merger of all associates of SBI will take the total assets of the combined entity to Rs 8,00,000 crore, making the lender a global financial powerhouse.

No plans to raise additional capital, says O P Bhatt

Pointing to comfortable capital adequacy, SBI Chairman O P Bhatt on Friday said that the countrys largest lender did not plan to raise additional capital through equity offering in the near future.

The bank has no plans for either rights issue in the domestic market or issue of American depository receipts (ADRs) /global depository receipts (GDRs) for international investors, Bhatt said, addressing shareholders at the banks annual general meeting on Friday.

The bank expected its capital adequacy to reach 14.5 per cent by June-end, he added. Referring to the banks net interest margin (NIM), he said that this year (2009-10) the NIM was expected to be below 2.7 per cent. Its margin slipped to 2.93 per cent in 2008-09 from 3.07 per cent in 2007-08.