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State Bank of India on Monday said it would announce the name of its associate bank for merger by the end of next month, and would prefer an associate which is weak on deposit front.
"We are in advanced stages of making up our mind on what to do about this (merger). We will be making an announcement about one bank before September-end," Managing Director and Group Executive for Subsidiaries and Associates S Vishwanathan told reporters at the first quarter earnings announcement.
Chairman Pratip Chaudhuri said the preference will be to pick an associate bank that is weak on the deposits front. "We will look at a bank which is not very strong in retail deposits. SBI is cash surplus, it has more deposits than assets can absorb. We will look at a bank preferably which has more assets but does not have similar strength in deposits," Chaudhuri said.
The bank had constituted a committee under Vishwanathan to look into the matter.
Chaudhuri, who had earlier said the process could start in September, today said the bank is comfortable with the capital position to undertake a merger at this point.
Chaudhuri also discounted State Bank of Hyderabad, saying the political situation over the moves of bifurcating Andhra Pradesh restrict it from moving on the name. That leaves State banks of Jaipur & Bikaner, Mysore, Patiala and Travancore on the table. Chaudhuri was earlier quoted as saying that the merger of one of the associates would cost up to Rs 2,000 crore.
SBI's total capital adequacy stood at 12.12 per cent as of June quarter, with the core tier-I capital at 9.01 per cent. It is also expecting some infusion from the government this fiscal. Through the merger, SBI -- ranked in the lower 60s among the top banks in the world -- can grow its size.
SBI did the first amalgamation of one of its associates, State Bank of Saurashtra, in 2008 followed by State Bank of Indore in August 2010.
