MERGER OF STATE

BANK OF INDORE
WITH STATE BANK OF
INDIA
INTRODUCTION
 State Bank of India
 State Bank of India (SBI) a premium and the largest bank in
India which is a Government sponsored agency, being a PSU
bank also it has earned name and fame across the globe
specially standing firmly in subprime crisis in America and
melt down inequity market globally.
 The bank traces its ancestry back through the Imperial Bank of
India to the founding in 1806 of the Bank of Calcutta, making
it the oldest commercial bank in the Indian Subcontinent.
 The Government of India nationalized the Imperial Bank of
India in 1955, with the Reserve Bank of India taking a 60%
stake, and renamed it the State Bank of India.
 In 2008, the Government took over the stake held by the
Reserve Bank of India.
FINANCIALS
  Mar ' 10  Mar ' 09  Mar ' 08  Mar ' 07  Mar ' 06 

Capital
Adequacy  13.39  14.25  13.47  12.34  11.88
Ratio

PROFITABLITY          
RATIOS

Net Profit  10.54  12.03  11.65  10.12  11.21

Margin

Reported
Return On Net  13.89  15.74  13.72  14.50  15.94
Worth
BORROWING RATIOS Mar ' 10  Mar ' 09  Mar ' 08  Mar ' 07  Mar ' 06 

Borrowings from RBI as  0.00  0.00  2.51  2.51  0.00

% to Total Borrowings

Borrowings from other

banks as a % to Total  7.93  1.71  15.18  3.16  3.26
Borrowings

Borrowings from others

as a % to Total  29.57  5.13  7.05  8.97  18.41
Borrowings

Borrowings within India

as a % to Total  37.51  6.84  24.75  14.65  21.67
Borrowings

Borrowings from outside

India as a % to Total  62.48  93.15  75.24  85.34  78.32
Borrowings
DEPOSIT RATIOS Mar ' 10  Mar ' 09  Mar ' 08  Mar ' 07  Mar ' 06 
Demand Deposit of  15.24  14.92  18.26  18.82  17.89
Total Deposits
Saving Deposit of Total  52.73  26.71  28.69  29.65  29.66
Deposits
Time Deposit of Total  32.01  58.36  53.04  51.52  52.44
Deposits

Deposits within India  95.10  95.68  95.77  96.42  96.36

as % to Total Deposits

Deposits Outside India  4.89  4.31  4.22  3.57  3.63

as % to Total Deposits

PER BRANCH          
RATIOS
Operating Income Per  6.80  6.49  5.53  4.57  4.10
Branch
Operating Profit Per  1.15  1.27  1.07  0.81  0.71
Branch

Net Profit Per Branch  -3.02  0.79  0.65  0.47  0.48

Borrowings Per Branch  8.15  4.65  5.04  4.14  3.31

Deposits Per Branch  63.63  64.30  52.33  45.37  41.10

GROWTH
With 11,448 branches and a further 6500+associate
bank branches, the SBI has extensive coverage.
State Bank of India has electronically networked all of
its branches under Core Banking System(CBS).
The bank has one of the largest ATM networks in the
region. More than 8500 ATMs across India.
The State Bank of India has had steady growth over its
history, though it was marred by the Harshad Mehta
scam in 1992.
In recent years, the bank has sought to expand its
overseas operations by buying foreign banks. It is the
only Indian bank to feature in the top 100 world banks
in the Fortune Global 500 rating and various other
rankings
STATE BANK OF INDORE
 One of the nationalized banks in India, State Bank of Indore was formerly
named as Bank of Indore Ltd. It became a subsidiary of State Bank of India
on 1 January 1960, under the State Bank of India Subsidiary Banks Act,
1959. Bank of Indore Ltd. and came to be known as State Bank of Indore,
after its association with SBI.
 In 1965, State Bank of Indore took over The Dewas Senior Bank Ltd. as
well. The business turnover of the Bank crossed Rs.47000 Crore at the end
of December 2008.
 Apart from general banking operations, State Bank of Indore has
undertaken multi-faceted banking activities too. It has also succeeded to
great extent in reaching the rural sectors, especially agricultural segment in
the country.
 The State Bank of Indore was initially known as the Bank of Indore Ltd.
From January 1, 1962, this bank became a subsidiary of the State Bank and
thus, it came to derive its name.
 FINANCIALS
  Mar ' 09 Mar ' 08 Mar ' 07 Mar ' 06 Mar ' 05
Per share
ratios
Reported EPS
(Rs) 1,593.82 1,337.19 1,085.47 794.89 761.01

Dividend per
share 150.00 150.00 150.00 125.00 100.00

Operating profit
per share (Rs) 1,708.58 1,009.45 1,893.86 1,136.23 -112.95
Profitability
ratios
Operating
margin (%) 11.02 7.93 17.63 14.80 -1.78
Gross profit
margin (%) 10.08 6.32 15.77 11.90 -4.06
Net profit
margin (%) 9.10 9.22 9.92 9.97 10.33
Reported
return on net
worth (%) 17.82 17.77 16.13 13.66 14.73
Return on
long term
funds (%) 144.35 143.42 121.18 94.92 81.98
Leverage
ratios
Total
debt/equity 18.11 18.76 16.97 16.37 15.28
Owners fund
as % of total
source 5.23 5.05 5.56 5.75 6.14
Fixed assets
turnover
ratio 25.94 21.72 6.56 5.17 14.40
Payout ratios
Dividend
payout ratio
(net profit) 11.01 13.12 16.16 17.93 14.85

Earning
retention ratio 88.99 86.88 84.62 77.82 85.15

Liquidity
ratios
Current ratio 9.93 8.44 0.48 0.67 0.51
Quick ratio 10.70 9.17 9.39 6.33 7.83
WHY MERGE?

 Social culture became cut-throat, and shifted from social to

commercial compulsions.

 Spirit of competition,

 The situation became farcical with SBI having two/three

branches on a street, with bank fully or largely owned by SBI.
 Other reasons:

 Saving of staff cost.

 Saving on infrastructural cost like premises,

 Encashing surplus real estate,

 Will rise in clout of SBI (monopoly aspect) .

STEPS FOLLOWED:
 The main legal steps involved in the merger were as under:
 Passage of resolution by Boards of acquirer and acquiree banks
proposing merger.
 Passage of Scheme of merger

 RBI (i.e. regulator) permission

 Fixing of swap ratio

 Inviting objections to swap ratio from share-holders

 Govt. (i.e. majority owner) permission followed by Gazette

notification.
INTERNATIONAL PRESENCE
 Regional office of the State Bank of India (SBI), in
Mumbai.

 It has branches in many countries as Colombo, Dhaka,

Frankfurt, Hong Kong, Johannesburg, London and
environs, Los Angeles, Male in the Maldives, Muscat,
New York, Osaka, Sydney, and Tokyo.
 In 1990 it established an offshore bank, State Bank of
India (Mauritius). It has two subsidiaries in North
America, State Bank of India (California), and State
Bank of India (Canada).
 In 1982, the bank established its California subsidiary,
which now has seven branches. The Canadian subsidiary
was also established in 1982 and also has seven
branches, four in the greater Toronto area, and three in
British Columbia.
BENEFITS

1. Growth and diversification.

2. Synergism.
3. Complementary internal fund flow.
4. Efficient financial leverage.
5. Knowledge sharing.
6. Tax and strategic advantage.
7. Asset class increase and diversification.
8. Introduction and adaption of new technology.
9. Sharing and market dynamics.
10. Reduction in marketing cost.
Business Implications:

 Administrative setups have to be closed

 Branches in close proximity in each other merged
 Specialized branches already in SBI will take up branches of
state bank of Indore.
THANK YOU 