Merger roadmap: SBT to kick-start valuation exercise

The State Bank of Travancore (SBT) has asked SBI Capital Markets to find a Category 1 merchant banker for valuing and fixing the share-swap ratio ahead of its merger with State Bank of India (SBI).

Once this is done, the bank will go through with normal SEBI formalities such as making an offer to shareholders, said CR Sasikumar, Managing Director, SBT.

“We’re a listed bank, so is SBI. Shareholders would like to know what are the valuations involved, what is the share swap ratio…these things would need to be done transparently.”

The merger includes a fair number of actions on the part of the parent bank SBI as well as SBT in terms of systems, integration, records, registers and policies. There are specific teams working on these aspects.

The SBI Group chairman has already expressed the wish that the merger should be completed “at the earliest.”

It should likely happen somewhere in the third quarter or definitely in the fourth quarter. The task is made easy since both the banks work on the same core banking platform, Sasikumar said.

Integration of systems should not be a big issue. There are minor technical details though, like some common account numbers that need to be sorted out. An entire team, called the Associate Banks Consolidation Department, is engaged in a very detailed exercise, Sasikumar said.

Each associate bank’s case is taken up individually and there will be a person looking for collecting required data. These relate to fixed assets, outstanding claims, and legal suits pending, if any, among others.

Asked about the value proposition that SBT brings to the table, Sasikumar said it has a branch-reach of 850. That’s nearly double of SBI’s network in Kerala.

“We’ve close to 22 per cent of the deposit share in the State and 15-16 per cent share of advances. We have a trained and dedicated staff of close to 15,000, some good assets including this (headquarters) building and real estate elsewhere.”

Asked what the merger might cost SBT, he said he has not really put a number to it. “I frankly don’t think it is going to cost us any. If anything, it will be beneficial for our stakeholders — customers, shareholders and employees.”