Thursday, August 21, 2008

State Bank of Hyderabad merger likely to be cleared by banking major

State Bank of Saurashtra (SBS) merger with the parent State Bank of India (SBI) has reached the last lap it is expected that the banking major is likely to clear decks for the merger of another associate bank - State Bank of Hyderabad (SBH).

Sources have all the information of the developments said that merger is expected it is only matter of time.

The sources informed, “SBS is going to establish the model for the merger of other associate banks. For any bank, it’s human resource integration that’s the most important. Even in the case of SBS, that issue still remains unresolved. Once solved, it can be replicated for other banks”.

Probably it will take another three months for SBI to resolve the HR issues in SBS.

SBI is working on Project SHIP signaling for the merger of sequence of associate banks in the near future.

SHIP is short form for four associates — State Bank of Saurashtra, State Bank of Hyderabad, State Bank of Indore and State Bank of Patiala.

“We know its coming. Though finance minister P Chidambaram has assured the unions that no merger proposal would be taken up without a thorough consultative process, things seem to be moving fast in favour of SBI,” Harsha Vardhan Madabhushi, SBH’s director, said. Nowadays sbi car loan scheme is becoming popular as of the low interest rates and easy repayment facility available.

Harsha Vardhan said, the decisions are being automatically certified by the government as they being observed as the bank’s internal issues.

“The unions are not able to digest the deviation from the commitment. There is a plan for indefinite strike starting sometime in September 2008 against the merger proposal,” Madabhushi said.

Indore and Patiala are among the unlisted bodies of seven associate banks of SBI.

Therefore the merger process becomes easy for the SBI since it can be done through a board resolution.

“All the four banks are wholly owned subsidiaries directly controlled by SBI. There is no need for any AGM and the merger decision can be taken anytime after convening a formal meeting of the boards of directors,” a source said.

SBH was established in 1941 by the erstwhile Nizam of Hyderabad, the SBH came into SBI’s control after the Subsidiary Banks Act came into effect in 1959.

Earlier bank used to look after Nizam’s central bank managing the Osmania Sikka and the treasury, with time bank has grown into an institution with about 12,671 employees and over 1,000 branches.

The bank’s branches still take care of the population in the erstwhile Nizam’s region of parts of Telangana in Andhra Pradesh, Karnataka and Maharashtra.

By the end of the quarter ended on June 2008, the bank’s total income was at Rs 1,369.87 crore including an interest income of Rs 1,226.49 crore and a profit of Rs 55.82 crore.

By the end of the fiscal year March 2008, the bank had earned an income of Rs 5,080.29 crore and net profit of Rs 556.99 crore. Currently SBH is having an equity base of Rs 17.25 crore.

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