Cabinet approves SBI merger; stock surges

The Union Cabinet has approved the merger of five associate banks with the parent State Bank of India (SBI), which will catapult any bank from India to among the top 50 global lenders for the first time. However, the merger does not include Bharatiya Mahila Bank.

The five associate banks are State Bank of Bikaner and Jaipur, State Bank of Hyderabad, State Bank of Mysore, State Bank of Patiala and State Bank of Travancore.

Following this merger, the SBI opened in green on Thursday. The stock of the company has surged by 3 per cent, while State Bank of Bikaner & Jaipur is up by 5 per cent. SBI Mysore is up by 6 per cent and SBI Travancore up by 6 per cent.  

The merger is expected to be a huge game changer, as SBI will emerge as a banking giant having one-fourth of the market share in the Indian banking industry. In the last one year, the stock of SBI has surged by 77 per cent and has outperformed both Bankex and Sensex.

Shareholders have a reason to cheer, as they would receive 28 shares of SBI for every 10 shares of SBBJ and 22 shares for every 10 shares of SBM/SBT.