Project Report

(Submitted for the Degree of B. Com Honours under the University of Calcutta)

___________________________________________________________________________

MERGER AND ACQUISITIONS IN THE BANKING SECTOR

Submitted by:
Name of the Candidate: DIYA SHAH
Room Number: 13
Roll Number: 1197

Supervised by:
Name of the supervisor: Prof. Saptarshi Ray
Name of the College: St. Xavier’s College

Month and Year of submission:

April 2021

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 St. Xavier’s College (Autonomous)

Department of Commerce
___________________________________________________________________________
PROJECT COMPLETION AND PLAGIARISM VERIFICATION CERTIFICATE

Student Name: DIYA SHAH

Room No.:13 Roll No.: 1197

Title of the dissertation: MERGERS AND ACQUISITIONS IN THE BANKING

SECTOR

The above dissertation was scanned using iThenticate for similarity detection and the
similarity index is as follows:

Similarity Index: 25%

The dissertation may be considered for submission.

Name of the Supervisor: Prof. Saptarshi Ray

Signature:

Date: 22nd April 2021

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 Annexure- III

Student's Declaration

I hereby declare that the Project Work with the title MERGERS AND ACQUISISTIONS
IN THE BANKING SECTOR submitted by me for the partial fulfilment of the degree of
B.Com. (Honours) at St. Xavier’s College (Autonomous), Kolkata is my original work and
has not been submitted earlier to any other Institution for the fulfilment of the requirement for
any course of study.
I also declare that no chapter of this manuscript in whole or in part has been incorporated in
this report from any earlier work done by others or by me. However, extracts of any literature
which has been used for this report has been duly acknowledged providing details of such
literature in the references.

Signature:

Name: DIYA SHAH

Address: Kolkata

Room No.: 13
Roll No.: 1197

Place: Kolkata
Date: 22nd April 2021

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 ACKNOWLEDGEMENT

I would like to express my sincere gratitude to St. Xavier’s College for providing me with
such a wonderful opportunity to prepare the project, by including this as a part of our study
curriculum.

I am very grateful to my project guide Prof. Saptarshi Ray, for his valuable time and guidance
throughout the project. I'm also grateful for his warm demeanour and motivation, which aided
me greatly in finishing this project study.

Last but not least, I'd like to thank my parents for always encouraging me to achieve
excellence.

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 Table Of Contents

S.NO CONTENTS PAGE NO.

1 Introduction 6

2 Literature review 7

2 Objectives 8

3 Research methodology 9

4 Conceptualisation 10

5 Risks associated with merger 11

6 State Bank of India 12

7 Reasons for merger 16

8 Analysis and Findings 17

9 CAMELS Analysis 21

10 Criticism 25

11 Conclusion 26

12 References 27

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 INTRODUCTION

The subject of this project is banking mergers and acquisitions. When two businesses merge
to become a new entity, this is known as a merger. A merger is equivalent to an acquisition or
takeover, except that existing shareholders of all companies involved keep a stake in the new
company, while a company buys the bulk of another company in an acquisition.

In the banking sector, the essence and quality of employment has also changed in recent
years. In terms of retail banking, the majority of Indian private sector banks are expected to
become more aggressive. They are pursuing acquisition as a way of acquiring more retail
customers. The Indian banking system has seen a number of high-profile mergers in recent
years, including Punjab National Bank, Oriental Bank of Commerce, and United Bank of
India merging to form one lender, Canara Bank acquiring Syndicate Bank, and Union Bank
of India merging with Andhra Bank and Corporation Bank.

A merger is simply the unification of two or more banks. Mergers are widely thought to
encourage synergies. The reasons for mergers and acquisitions, their practise, their effect on
jobs, working conditions, and customers, their obstacles, and examples of bank mergers and
acquisitions in India are all covered in this project.

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 Literature Review

The Merger Review Process is a must for effective banking consolidation.

By: Kishore Mundargi
(The Shamrao Vithal Co-operative Bank Ltd.)

It will be critical to evaluate the merger's impact on the banking system's safety and

soundness when reviewing any bank merger proposal. A merger review process must be

established, and the authority in charge of putting the process in place must be identified.

The effect of mergers and acquisitions on banking sector stakeholders

By: Dr. S.Hasan Banu

Mergers and acquisitions are widely viewed as one of the most effective ways to cope with

competitive pressures. Mergers are only one solution for financial sector consolidation; there

could be a better and more advantageous way to maximise the value of bank stakeholders.

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 OBJECTIVES

Objectives of this project are:

➢ Reasons for bank mergers and acquisitions in India

➢ Also, to determine the results of bank mergers and acquisitions.
➢ To understand how mergers and acquisitions affect working and job conditions
➢ To understand how mergers and acquisitions affect customers.

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 RESEARCH METHADOLOGY

A research methodology is a method for solving a research problem in a systematic

manner. It can be thought of as a science that studies how research is carried out in a
systematic manner. We look at the different steps that a researcher takes to investigate a
research issue, as well as the reasoning behind them. The research methodology covers all
aspects of the study, including the research design, sampling, data collection, and
interpretation.

Steps of methodology:

Gathering of Information

Data collection and organisation

Data visualisation

Data review

Data interpretation

Research design

Data collection and analysis are aided by the research design. It ensures that the analysis is
relevant to the study's goal and that the proper procedure is followed. The current research
was primarily an exploratory one, with the aim of determining the characteristics of a specific
person, community, or organisation.

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 CONCEPTUALIZATION

Mergers and acquisitions, or M&As, are a type of corporate finance strategy and management
that involves the merging and acquisition of various entities and properties. Typically,
mergers take place in a friendly setting, with executives from both firms participating in a due
diligence process to ensure that all components are successfully combined. Mergers, on the
other hand, have a history of failing to bring real value to shareholders.

Despite the fact that the economic reasons for all Mergers and Acquisitions are identical, the
legal processes involved in Mergers and Acquisitions are not.

A. Mergers: A merger, also known as an amalgamation, is the fusion of organisations

(banks) into one. Companies Act, the court & law regulates mergers.
B. Acquisition: This is the act of one corporation having effective control over the assets or
management of another corporation without the two merging. Mergers and acquisitions
are controlled by SEBI.
Difference between Mergers and Acquisitions

There isn't much of a distinction between mergers and acquisitions. Both are investments
in the purchase of a bank or corporation. The only difference is in the purchase process
itself. In mergers, by way of share transactions/asset/liability exchanges, one bank
merges with another, losing its name. In acquisitions/takeovers, one company or a group
of companies acquires a majority interest in capital ownership without either of the
companies losing their distinct identities.

The organisational method, however, makes a significant difference in the eyes of the
law. Although the Companies Act of 1856 regulates and covers mergers, SEBI's takeover
rules govern acquisitions and takeovers. As a result, the process is overseen by the High
Court and the Registrar of Companies, while the acquisition is carried out in accordance
with SEBI guidelines.

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 RISKS ASSOCIATED WITH MERGER

Consolidation comes with a number of risks, some of which are mentioned below:
1) If two banks combine into one, the organization's size will eventually expand. It's
not necessarily true that bigger is better. The scope of the project can become too
large and out of management's control. Increased size may become a liability
rather than a profit.
2) Consolidation does not yield immediate results; there is a time of incubation until
the results are available. Losses and difficult interim periods are often associated
with mergers and acquisitions before the final profits begin to flow.
3) Restructuring is largely the product of top-down decisions. It is a top-down
judgement, and the willingness of all organisations' rank and file might not be
forthcoming. Employees experience difficulties with industrial relations,
deprivation, depression, and demotivation as a result of this.
4) A PSU bank or an older generation bank, for example, and a technologically
superior international bank, may have dramatically different structures, processes,
and procedures.
5) All mergers are correlated with a valuation problem. Established entities'
shareholders must be issued new shares. There is yet to be built a full-proof
valuation method for transition and reimbursement.
6) There's also the issue of brand projection to consider. When established brands
with a strong following, things get a little more complicated. The question is if the
previous labels should be projected or whether they should be combined in favour
of a new comprehensive identity.

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 STATE BANK OF INDIA

The State Bank of India (SBI) is a statutory body of the Indian government that regulates
banking and financial services. The headquarters are located in Mumbai, Maharashtra. SBI
ranks 221st on the Fortune Global 500 list of the world's largest companies for 2020, making
it the world's 43rd largest bank and the only Indian bank on the list. It is India's largest public
sector bank, with a 23 percent asset market share and a 25 percent share of the overall loan
and deposit market.

It is the Indian Subcontinent’s oldest commercial bank which descended from the Bank of
Calcutta. The Imperial Bank of India was established when the Bank of Madras, the Bank of
Calcutta, and the Bank of Bombay merged to form the Imperial Bank of India, which was
later renamed the State Bank of India in 1955. The Imperial Bank of India was managed by
the Indian government in 1955, with the Reserve Bank of India (India's central bank) owning
60% and State Bank of India owning 40%.

The Union Cabinet approved the merger of the five remaining associate banks with the SBI
on June 15, 2016. (State Bank of Bikaner and Jaipur, State Bank of Hyderabad, State Bank of
Mysore, State Bank of Patiala, State Bank of Travancore, and Bharatiya Mahila Bank). This
came after a month, the SBI board approved a plan to merge with the banks on May 17, 2016.

The Union Cabinet approved the merger of five associate banks with SBI on February 15,
2017. Different pension obligation arrangements and accounting practises for bad loans,
according to an expert, would have an initial negative effect. The merger took effect on April
1, 2017.

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 STATE BANK OF BIKANER AND JAIPUR

The State Bank of Bikaner (founded in 1944) and the State Bank of Jaipur (founded in 1943)
merged in 1963 to create this bank. Both of these banks were subsidiaries of the State Bank
of India under the State Bank of India Act,1959.

On April 25, 1966, SBBJ acquired Govind Bank (Private) Ltd., Mathura, which had been
founded on April 8, 1963.

Marwar Gramin Bank was the third Regional Rural Bank funded by SBBJ, and it served the
districts of Pali, Jalore, and Sirohi.

The plans to make SBI one of India's top 50 banks had a major impact on SBBJ. The decision
to merge SBBJ with its five co-subsidiaries was declared in 2016 and ratified on February 15,
2017 by the Indian government. It merged with SBI on March 31, 2017.

STATE BANK OF HYDERABAD

State Bank of Hyderabad (SBH) was a Hyderabad-based regional bank with headquarters in
Gunfoundry, Abids, Telangana. It was founded by Mir Osman Ali Khan, the 7th Nizam of
Hyderabad. It was once one of India's nationalised banks. The Hyderabad State Bank was
founded in 1941. It was an affiliate bank of the SBI, the largest of its kind, from 1956 to 31
March 2017. On April 1, 2017, the State Bank of Hyderabad merged with SBI.

The bank's headquarters were in Hyderabad, India's Gunfoundry Area. SBH employed over
18,000 people and had over 2,000 locations. As of December 31, 2015, the bank's revenue
had reached Rs. 2.4 trillion, with a net profit of Rs. 8.12 billion.

Before the merger, the bank had done well, earning many awards for its banking practises. At
the time of the merger, The chairman was Mrs. Arundhati Bhattacharya, and the managing
director was Shri Mani Palavesan. It was the Telangana State's top banker.

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 STATE BANK OF MYSORE

State Bank of Mysore was an Indian public sector bank headquartered in Bangalore. It was
one of the State Bank of India's five affiliate banks, which were all merged with the State
Bank of India on April 1, 2017.

The Reserve Bank of India named "Mysore Bank" as an agent to handle government
company and treasury operations in 1953, and under the State Bank of India Act 1959, it
became a subsidiary of the State Bank of India in March 1960. The bank is now a State Bank
Group Associate Bank, with the State Bank of India owning 92.33 percent of the assets. The
Bank's shares were listed on the stock exchanges of Bangalore, Chennai, and Mumbai

In June 2014, this bank had 976 branches and 10627 staff, with 772 branches (79%) in the
state of Karnataka. Bangalore, Mysore, Mangalore, Mandya, Hassan, Shimoga, Davangere,
Bellary, Tumkur, Kolar, Chennai, Coimbatore, Hyderabad, Mumbai, and New Delhi were
among the bank's regional offices. The bank's revenue was around US$19 billion in 2013-
2014, with a profit of around US$46 million.

STATE BANK OF PATIALA

The State Bank of Patiala was established in 1917 as a member of the State Bank Group's
associate bank network. State Bank of Patiala had 1445 service outlets, including 1314
branches, in all major Indian cities at the time of the merger, with the majority of branches
located in Punjab, Haryana, Himachal Pradesh, Rajasthan, Jammu & Kashmir, Uttar Pradesh,
Madhya Pradesh, Delhi, Gujarat, and Maharashtra. It merged with State Bank of India on
April 1, 2017.

His Majesty On November 17, 1917, Maharaja Bhupinder Singh of Patiala State founded the
Patiala State Bank to promote agriculture, trade, and industry. For the princely state of

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Patiala, the bank merged the functions of a commercial bank and a central bank. The bank
only had one branch in Undivided India, at Chowk Fort in Patiala.

Following the creation of the Patiala and East Punjab States Union in 1948, the bank was
reorganised, brought under the control of the Reserve Bank of India, and renamed Bank of
Patiala. On April 1, 1960, the Bank of Patiala was renamed the State Bank of Patiala after
becoming a subsidiary of the State Bank of India.

State Bank of Travancore

SBT was a major Indian bank with headquarters in Thiruvananthapuram, Kerala, and was a
major affiliate of State Bank of India.

SBT was a State Bank Group subsidiary that also had private shareholders. It was Kerala's
most prestigious bank. SBT had a network of 1,157 branches and 1,602 ATMs as of March
31, 2015, serving 18 states and three union territories. The Union Cabinet accepted a plan to
combine SBT and four other affiliate banks with SBI on February 15, 2017. On March 31,
2017, it merged with its parent bank.

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 REASONS FOR MERGER

➢ SBI and its affiliate banks receive subsidies and contributions from the Indian
government for bad debt rehabilitation and share capital. It would be easier for
the government to provide assistance to this single amalgamated bank rather
than to SBI and its affiliate banks separately.
➢ SBI's profitability has been declining in recent years, and this merger would
enable the company to display a better profitability position in its books. The
group's net profit dropped from Rs. 12,225 crores in 2016 to Rs. 241 crores in
2017, with losses mostly attributable to associate banks.
➢ To recover defaulted loans and reduce nonperforming assets (NPAs).
➢ In order for SBI and affiliate banks to be able to meet their obligations in the
event of a financial crisis, they must be rehabilitated.
➢ SBI has grown in size as a result of the merger. It now has a broader asset base
and is ranked 45th among the world's leading banks.
➢ The management of the bank would become smoother, since previously all of
the branches were run by different management teams, despite the fact that the
holdings were the same, which made the whole process tedious.
➢ The cost of operating a large number of branches would decrease, increasing
the bank's profitability.

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ANALYSIS AND FINDINGS

HOW WILL THE ASSOCIATED BANKS' AND SBI'S SHARES BE

DISTRIBUTED?

✓ The board of directors of SBI has approved a merger agreement in which SBBJ

shareholders will receive 28 SBI shares (1 each) for every 10 SBBJ shares they own

(10 each). For every ten SBM and SBT shares, SBI shareholders will receive 22 SBI

shares.

✓ State Bank of Patiala and State Bank of Hyderabad each had their own acquisition

schemes authorised by SBI. Since they are wholly owned by the SBI, there would be

no equity swap or cash outflow.

STATUS OF SBI AFTER MERGER

• SBI will now have a total of 23,899 branches and 271,765 staff.

• SBI currently has more than Rs 26 lakh crore in deposits and Rs 18.50 lakh crore in

advances.

• The bank has a total customer base of 37 crore people and approximately 59,000

ATMs throughout the country.

• SBI is on track to become one of the world's top 50 major banks.

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 FINANCIAL ANALYSIS

➢ Interest Income on Advances increased from Rs. 28,582 crores in the first
quarter of FY16 to Rs. 29,884 crores in the first quarter of FY17 (4.56 percent
increase)
➢ Interest Income on Resources Operations grew from Rs. 10,254 crores in the
first quarter of FY16 to Rs. 10,887 crores in the first quarter of FY17 (6.18
percent growth).
➢ Total interest income rose from Rs. 39,643 crores in the first quarter of FY16
to Rs. 41,594 crores in the first quarter of FY17 (4.92 percent growth).
➢ Deposit interest expenses rose from Rs. 24,097 crores in first quarter of 2016
to Rs. 25,169 crores in first quarter of 2017(4.45 percent growth).
➢ Total interest expenses rose from Rs 25,911 crores in first quarter of 2016 to
Rs 27,281 crores in first quarter of 2017 (5.29 percent growth).
➢ Net Interest Income rose from Rs.13,732 crores in the first quarter of FY16 to
Rs.14,312 crores in the first quarter of FY17 (4.23 percent growth).
➢ Non-Interest Income rose by 44.16 percent YoY, from Rs.5,088 crores in
Q1FY16 to Rs.7,335 crores in Q1FY17, owing to a 212.15 percent rise in
Profit on Sale of Investments, a 22.30 percent increase in Recovery in Written-
Off Accounts, a 21.93 percent increase in Forex Income, and a 6.08 percent
increase in Fee Income.
➢ Operating Income increased by 15.02 percent in Q1FY17, from Rs.18,820
crores in first quarter of 2016 to Rs.21,647 crores.
➢ Staff Expenses rose 5.93 percent in Q1FY17, from Rs.5,906 crores in
Q1FY16 to Rs.6,257 crores in Q1FY17.
➢ Operating Expenses increased by 10.14 percent in Q1FY17, from Rs.9,618
crores to Rs.10,594 crores, up from Rs.9,618 crores in Q1FY16.
➢ Operating profit increased by 20.12% in Q1FY17, from Rs.9,202 crores to
Rs.11,054 crores, up from Rs.9,202 crores in Q1FY16.

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 ASSET QUALITY

• Gross nonperforming assets increased by 44 basis points to 6.94 percent in Q1 FY17,

up from 6.50 percent in Q4 FY16 and 265 basis points from Q1 FY16.

• Net Non Performing Assets increased by 24 basis points to 4.05 percent in first quarter
of 2017, compared to 3.81 percent in Q4 FY16 and 181 basis points in first quarter of
2016.

IMPACT OF MERGER IN INDIAN BANKING SECTOR

With total assets of Rs 29.7 lakh crore, the combined entity (SBI and associate banks) will be
a financial sector powerhouse.

According to a study released by global rating agency Moody's, since SBI already owns SBH
and SBP and has majority stakes in the other three associate banks, the merger would have
little impact on SBI's credit metrics. Furthermore, BMB started operations in 2013 and
accounts for less than 0.1% of SBI's total assets.

1) The Indian banking industry has never seen such a large-scale restructuring before.

2) The merger will result in a banking behemoth with a Rs 37 lakh crore asset book.

3) SBI will sell 28 of its own shares for every ten shares owned by State Bank of Bikaner
BSE 0.77 percent and Jaipur.

4) It will exchange 22 of its shares for every ten State Bank of Mysore shares owned.

5) State Bank of Travancore will issue 22 of its own shares for every ten shares it owns.

6) For every 100 crore equity shares of Bhartiya Mahila Bank, SBI will issue 4,42,31,510
shares with a face value of Rs 1.

7) SBI's ranking in Bloomberg's largest bank by assets would improve as a result of the
merger. It has a good chance of breaking into the top 50.

8) SBI's asset base will now be five times that of ICICI Bank, India's second-largest bank.

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• Economies of scale and a lower cost of doing business are two of the
advantages of a merger.
• One of the key causes of the banking crisis is technical inefficiency. Small
banks have a higher level of inefficiency. Hence, A merger will be
beneficial.
• The combined size of each business entity, following the merger, is
expected to improve the Indian banking system in general, and Public
Sector Banks in particular.
• After the merger, Indian banks would be able to better control their liquidity
– both short and long term – positions. As a result, they won't need to rely
on call money market overnight borrowings or the RBI's Liquidity
Adjustment Facility (LAF) or Marginal Standing Facility (MSF)
• The new entity's operational synergy and economic size would result in cost
savings and increased income.
• A large number of CMD, ED, GM, and Zonal Manager positions will be
eliminated, saving crores of rupee
• Customers would have access to fewer banks, which would sell a broader
range of products at lower prices.
• Mergers and acquisitions may help to diversify risk management.

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Data Analysis and Interpretation on the basis of CAMELS analysis

1. Capital Adequacy (CAR)

Capital Adequacy Capital adequacy ratio Advances to total assets
ratio
Pre-merger 12.38% 65%

Post-merger 12.60% 56%

Interpretation-
The Pre-Merger average ratio of CAR of SBI and its associates is 12.38 percent,
while the Post-Merger CAR of SBI is 12.60 percent, as shown in the table. Both
ratios are higher than the normal ratio recommended by Basal II and the RBI. As
a result, we can conclude that SBI and its affiliates were able to meet the
minimum CAR requirement. It demonstrates that the banks are well-capitalized
both before and after the merger. SBI and its affiliates also have a Pre-Merger
average Advances to Total Assets ratio of 65 percent. After the merger, the ratio
fell to 56 percent, meaning that SBI made less advances out of its total assets.

2. Asset Quality
Asset Quality Gross NPA to total Net NPA to net
advances advances
Pre-merger 6.47% 3.61%
Post-merger 11.00% 5.73%
Interpretation-
Pre-merger, the average ratio of Gross NPA to Total Advances for SBI and its
associates was 6.47 percent, according to this table. SBI's gross nonperforming
assets (NPAs) rose after the merger, resulting in a rise in its gross nonperforming
asset ratio to 11%. Also, the average ratio of Net NPAs to Net Advance of SBI
and its affiliates was 3.61 percent before the merger, but it increased to 5.73
percent after the merger due to a rise in non-performing assets.

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 3. Management Efficiency

Management
Business per Profit per
Capability of Return on Asset Return on Equity
Employee Employee
the Banks

Pre-merger 14.92% 235 0.31% 6.40%

Post-merger 16.22 -243 -0.19% -3.78%

Interpretation-
By comparing the Pre-Merger average ratio of business per employee to the Post-
Merger ratio for SBI, this table shows that the Pre-Merger average ratio of
business per employee increases. Before the merger, it was Rs.14.92 and after the
merger, it was Rs.16.22. As a result, we may conclude that the capacity of the
board of directors and senior management to recognise, assess, track, and regulate
banking risks has improved somewhat as a result of the merger. However, the
benefit per employee ratio for SBI before and after the merger indicates a steady
decline in employee contribution to SBI profitability from 235 to -243. Similarly,
the ROA and ROE ratios have descended from 0.31 percent to -0.19 percent and
6.4 percent to -3.78 percent, respectively.

4. Earning Quality

Operating profits to
Earnings Quality Net profits to total assets
total assets
Pre-merger 1.16% 0.36%
Post-merger -0.45% -0.19%

Interpretation-
Both the Operating Profits to Total Assets and the Net Profits to Total Assets
ratios fell after the merger, from 1.16 percent to -0.45 percent and 0.36 percent to

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 - 0.19 percent, respectively. SBI's profitability has been severely harmed as a
result of its merger with less profitable (State Bank of Patiala) associates.

5. Liquidity

Liquid Assets to Total

Liquidity Total Deposits to Total assets
Assets

Pre-merger 4.98% 88.12%

Post-merger 12.87% 78.33%

Interpretation-
The Liquid Assets to Total Assets ratio has risen from 4.98 percent to 12.87
percent in this table, indicating an improvement in SBI's liquidity position. The
ratio of total deposits to total assets falls from 88.12 percent to 78.33 percent,
indicating a reduction in SBI's ability to provide adequate liquidity to its
depositors.

Consolidated Table of CAMEL Model Analysis

1. Business per Employee and Profit per Employee

Ratio (000) Per Employee Profit Per Employee Business
Pre-merger 14.92 235
Post-merger 16.22 -243

Business per Employee and Profit per Employee

400

200

0
Profit per Employee Business per Employee
-200

-400

Pre-merger Post-merger

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2. 2. Calculated SBI Bank Ltd. and its associates' pre-merger and post-merger
ratios in percentages.
Ratios (%) Pre-merger Post-merger
Capital Adequacy 12.38 12.6
Advances to Total Assets 65 56
Gross NPA to Total 6.47 11
Advances
Net NPA to Total Advances 3.61 5.73
Return on Asset 0.31 -0.19
Return on Equity 6.4 -3.78
Operating Profits to Total 1.16 -0.45
Assets
Net profit to Total Asset 0.36 -0.19
Liquid asset to Total Asset 4.98 12.87
Liquid asset to Total Deposit 88.12 78.33

Pre merger and post merger Ratios of SBI Bank Ltd.

and its associates in percentage

100
80
60
40
20
0
-20

Pre-merger Post-merger

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 CRITICISM

➢ All of the Associate banks used to be owned by the rulers of their respective

countries. SBH, for instance, was once a Nizam bank. SBH has currently lost its

lustre.

➢ Under the auspices of the State Bank of Travancore Staff Union, employees of the

State Bank of Travancore (SBT) went on strike last year. The agitation was in

response to the SBT's decision to merge with the State Bank of India.

➢ SBT was the sole bank headquartered in Kerala.

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 CONCLUSION

Given SBI's declining profitability and the need for reconstruction, this merger
appears to be a wise move. It has elevated SBI to the top 50 banks in the world,
which is a significant achievement. However, the bank's profitability has dropped
by around Rs. 3000 crore as a result of the merger. This was mostly due to
cumulative losses of affiliate banks, which were reflected in the amalgamated
entity's balance sheet, dampening investor excitement. Investors should not give
up hope, however, since such risky moves have long-term consequences that
require time to manifest.

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 REFERENCES

WEBSITES-
1. Reference for reasons and effect of mergers

http://granthaalayah.com/Articles/Vol5Iss5/40_IJRG17_A06_331.pdf

2. Reference for camel model analysis

https://inspirajournals.com/uploads/Album/652927960.pdf

3. Reference for State Bank of India

https://en.wikipedia.org/wiki/State_Bank_of_India

4. Reference for impact of merger

https://www.slideshare.net/ShubhamSingla41/sbi-merger-and-history

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