Banking giant SBI to get bigger

With SBI being the largest lender in India, it will be interesting to discuss the size of the banking giant and the synergies, once it merges with its five associate banks viz., State Bank of Mysore, State Bank of Travancore,State Bank of Bikaner and Jaipur, State Bank of Hyderabad & State Bank of Patiala.Out of the five associate banks, two banks are not listed viz.,State Bank of Hyderabad and State Bank of Patiala.

Reports suggest SBI will also be acquiring Bharatiya Mahila Bank including their assets and liabilities.  Post acquisition of its associates by SBI the combined balance sheet size will be Rs.37 trillion which is at least 5 times higher than the second largest lender in India- ICICI Bank.

Arun Jaitley had hinted at consolidation in state owned banks in his budget speech and made government's intention clear by forming  a Bank Board Bureau with clear focus on solving the problems being faced by the beleaguered PSU banking sector. Banking behemoth will be created if the acquisition goes through and globally SBI will be one amongst the top 50 banks in the world in terms of size of assets. Synergies will be definitely encashed due to the merger as there is a lot of duplication; and lapses in operational activities as suggested by SBI chairman Arundhati Bhattacharya while speaking to media.

The acquisition though will face lot of opposition from the employees of associate banks; and the employee unions of the associate banks have already called for a strike on May 20. As per media reports the All India Bank Employees Association's (ALBEA) secretary general, Mr. CH Vekatachalam stated that the union is fine with the five associates merging together to form a single entity and that is what Mr. Arun Jaitley suggested in a recently held meeting.

State Bank of India is trading in green on Wednesday  up by almost 0.8 percent even as broader markets are down by almost 0.8 percent. SBI has been under pressure due to the NPA issue; and the stock is down by almost 38 percent over a 1 year period.