How do you perceive the associate bank merger with the nation’s biggest bank, State Bank of India?
Associate Bank merger with State Bank of India has been approved by Govt of India. Banks will wait for either to get merged or ready to open gates to acquire other banks. But how many mergers and acquisitions are successful. Are they really functioning well?
Already State Bank of India had an experience of merging two associate banks in the past. But this time there is some resistance from within the workforce of the associate banks for merger. These kind of cultural conflicts may have an impact on the big bank after merger.
Merger will benefit State bank of India in terms of business expansion, logistics and reputation. The biggest advantage in bank merger is to attract large number of new valuable customers. The bank will get scope for more capital to work with when it starts business operations for lending and investment activities. Another feature on merger is the operational size will be broadened geographically. This will give scope to reach the high targets faster.
The following are the 5 associate banks got formal approval from govt. of India to get merged with State Bank of India.
- State Bank of Bikaner and Jaipur
- State Bank of Hyderabad
- State Bank of Mysore
- State Bank of Patiala
- State Bank of Travancore
- Bharatiya Mahila Bank ( Not an associate, but a women bank)
Efficient Operations and Management:
Banking operations will scale to a higher scale as well bank efficiency ratio will improve. Combined infrastructure of compliance, risk management, accounting, operations and information technology are further efficiently dealt. They are administered in a single management after the bank merger. Monetarily SBI will have a lower combined threat outline, since a greater number of similar-risk, free loans decreases major institutional risk.
This merger will authorise the bank business to fill product or technology gaps. Another advantage of acquiring an associate bank ( which has its own style of earning / revenue model or commercial product) is sometimes easier than starting that business from the beginning.
Another advantage after merger can be technology upgradation.
Bank merger will surface more number of talents from the workforce. This may not reflect in the bank balance sheet, but it will play a major role in the bank merger. Associate Bank merger will strengthen the team of top management, improves business levels and raises to higher profit levels because of human component.
All the 5 associate banks have accepted for merger and so the acquisition has been went smoothly. Since the merger of associates with SBI is inevitable, the resources of all the banks will come together and the customers will have no complaints as they see the bank as normal as in the past.
But after merger bank has to manage customer opinion with focused, careful attention. In to-to, as there is not much difference in the technology platforms to financial products, there will not be much negative impact on the customers of the bank.
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