Sparks seem to have started flying with respect to the proposed merger of State Bank of India (SBI) with five associate banks even before negotiations between the parties could begin.
In a development late yesterday, the Chief General Manager of State Bank of Travancore (SBT), an associate bank, was summarily transferred to SBI, Hyderabad, apparently for ‘speaking his mind’ on the process sought to be followed in the matter.
Independent directors on the board of SBT that
They expressed dismay and disgust over the treatment meted out to an “affable and upright’’ official of SBT who was only doing his duty to protect the interests of the Kerala-based bank.
According to them, the process of acquisition was to be based on negotiations between the two banks, as directed in the original May 17memorandum. SBT was to enter into negotiations with SBI for acquisition of assets and liabilities.
Scheme of acquisition
On August 11, Adikesavan was nominated as the authorised person to conduct negotiations with his counterpart in SBI in pursuance of that original memorandum. It was also proposed that the scheme of acquisition to be drafted finally would reflect the conclusion of the negotiations.
But SBI proceeded to suddenly call a board meeting on August 18 and sent in a scheme of acquisition as a fait accompli to SBT. The Audit Committee of the Board of SBT, which had to approve the swap ratio, took strong exception to this.
The Committee grilled Adikesavan demanding to know if he, in his capacity as the authorised person, did negotiate anything with SBI. The official did not come up with a convincing answer except saying that between August 11 and 18 a number of holidays had intervened.
He seems to have incurred the wrath of the SBI board for ‘not saying everything was hunky-dory with the merger process,’ the independent directors said.
Swap ratio
Sajen Peter, Chairman of the Audit Committee of the Board of SBT, said this is a clear indication how SBT officers are going to be treated by the SBI management post-merger.
“I was disillusioned with the way the merger issue was being taken up by the board even on May 17. That was inappropriate in itself,” Peter told BusinessLine .
“As Chairman of the Audit Committee, I said I should have the agenda in advance. But I was presented with an envelop just hours before the meeting, which I refused to accept,” Peter said.
“This is an issue of merger of two banks and I wanted to know what negotiations have taken place. Adikesavan could not come up with a convincing reply except about holidays intervening.
“But he proceeded to mention about the swap ratio fixed by SBI. He revealed the truth in a most humble and polite manner. It was apparently not to the liking of SBI board. He has been crucified for being true to himself. He does not deserve this treatment.”
Two other independent directors, MC Jacob and V Kaliappan, too were of the view that due process had not been followed in the merger process, which was regrettable.