The country's largest lender, SBI, has set in motion the process of merging associate bank State Bank of Indore with itself by agreeing to give 34 shares of the parent company to minority shareholders for every 100 shares of the subsidiary bank.
For this purpose, SBI would issue up to over 1.16 lakh shares of face value of Rs 10 each to minority shareholders of State Bank of Indore, SBI informed the Bombay Stock Exchange today.
"The central board of the bank, in its meeting held on March 26, 2010, has approved issuance of maximum 1,16,052 shares, of face value of Rs 10 each, to the minority shareholders of State Bank of Indore as on record date at the agreed swap ratio (34 shares of SBI for every 100 shares of State Bank of Indore)," SBI said.
It further said that the issued capital of SBI would increase from Rs 634.96 crore up to the maximum Rs 635.08 crore, subject to approval of the scheme of acquisition of State Bank of Indore by the government.
Last week, SBI chairman O P Bhatt had said that the merger of its associate State Bank of Indore with itself could take place in the first quarter of the next fiscal.
"The proposal for the merger of State Bank of Indore with SBI is on track. The bank is waiting for the government approval," Bhatt had said, adding it may happen in the first quarter of next fiscal and that the bank is looking into procedural issue.
This will be the second such merger of its associate banks after SBI in August 2008, had merged State Bank of Saurashtra with itself.
Post-merger, the SBI will be left with five associate banks -- State Bank of Bikaner and Jaipur, State Bank of Travancore, State Bank of Patiala, State Bank of Mysore and State Bank of Hyderabad. Among these, State Bank of Bikaner and Jaipur, State Bank of Mysore and State Bank of Travancore are listed banks.
SBI holds 98 per cent stake in State Bank of Indore that posted a net profit of Rs 279 crore in 2008-09.
SBI also informed the BSE that the bank and Societe Generale announced the launch of operations of their joint venture company, SBI Custodial Services.
The bank added that SBI General Insurance Company, a subsidiary of the bank, has launched its limited operations.
"Initially, the business will be written within a limited geographical area within a few commercial products. The subsidiary is in the process of setting up its comprehensive IT infrastructure and is expected to commence full scale operations later during the year," SBI informed the BSE.
