Cabinet approves merger; SBI's associate banks gain
The Cabinet is likely to approve merger of five associate banks of the State Bank of India (SBI) with itself on Wednesday.
The five associate banks of SBI include- State Bank of Mysore, State Bank of Hyderabad (SBH), State Bank of Travancore, State Bank of Bikaner and Jaipur, and State Bank of Patiala (SBP).
According to media reports, the Cabinet may also approve merger of Bhartiya Mahila Bank to the entity on Wednesday.
Owing to this news development, stocks of State Bank of Mysore, State Bank of Bikaner and Jaipur, State Bank of Travancore are trading in the range of 17% to 20% in the afternoon trade on the Bombay Stock Exchange (BSE). Other two banks -State Bank of Patiala and State Bank of Hyderabad- are not listed on the stock exchanges.
At 14:28 hours, the stock of State Bank of Mysore was trading up 20% or Rs 91.30 at Rs 547.90 on the BSE.
At 14:28 hours, the stock of State Bank of Bikaner and Jaipur was trading up 17.20% or Rs 85.95 at Rs 585.65 on the exchange.
At 14:28 hours, the stock of State Bank of Travancore was trading up 17.01% or Rs 67.90 at Rs 467.00 on the BSE.
According to Moody's Investors Service, SBI's merger with its six banks which also includes Bhartiya Mahila Bank will cost around Rs 1,660 crore (nearly $250 million) and will have limited impact on its credit metrics, PTI reported last week.
"The merger will have limited impact on SBI's credit metrics, given that SBI already fully owns SBH and SBP and has majority stakes in the other three associate banks," Moody`s added.