Merger will lower operating costs for combined entity: SBI MD

 

LATEST NEWS – With the Union Cabinet granting approval to the merger into the State Bank of India (SBI) of its five associate banks, the public lender on Thursday said the combined entity would have lower management costs resulting in savings on operating costs.

“Once merger is complete, we will be in a position to save costs of these associate banks, because the structure of the five head offices will fold into one corporate office of the SBI. The zonal offices will also get integrated into our operations,” SBI Managing Director DK Khara told BTVi in an interview.

“Lesser management costs of these offices will get reflected in saving operating costs of banks. CASA (Current Account, Savings Account) will go up. Lots of cost efficiency and capital efficiency will come into play. It will save costs for banks, which will save resource cost and prove advantageous,” Khara said.

He said that though there are no plans to shut down branches, rationalisation of branches would take place – meaning dedicated branches for small and medium entreprise (SME) lending, servicing high net worth individuals (HNIs), among others.

“It will create much more value for customers,” he added.

The merged entity with the one-fourth of the market share would have a balance sheet of about Rs 40 lakh crore, 23,000 physical branches and 22,000 ATMs, Khara said.

Post-merger, a shareholder will get 28 shares of SBI for every 10 shares of State Bank of Bikaner and Jaipur (SBBJ). READ MORE

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