Cabinet to talk SBS-SBI merger this Thursday

The proposal for merger of State Bank of Saurashtra (SBS) with the State Bank of India (SBI) will be taken up by the Cabinet on January 10. “Once the Cabinet approves the terms and conditions for the SBS merger with SBI, it will set the tone for merger of the rest of the associates with the parent. Internally, it is envisaged that the merger with all the subsidiaries will be completed by the end of 2008. There are HR issues but they are not intractable,” a top official of the SBI group said. The merger of SBS with SBI will be completed on January 27. Meanwhile, it is expected that top officials from the six associate banks will meet on January 25 to pass an in-principle resolution for merger with SBI. The SBI-associates merger will entail providing for pension benefits for all employees. At present, employees have only two benefits: gratuity, and pension or provident fund. However, SBI provides all three benefits to its employees. “There is unlikely to be a major burden on the parent bank to provide the third benefit. It is a windfall for the associates’ employees who will now enjoy the third benefit,” a top official in the SBI group said. SBI will have to factor in changes in the accounting standards (AS-15) that mandate a provision for pension liabilities going forward. Banks have sought to stagger the provision over a period of five years starting April 2008. It’s not clear who among the unions will head the resolution of industrial disputes post-merger.

SBI, ICICI extend festive loan offer to January 31

State Bank of India (SBI) and ICICI Bank have extended their limited period festival offers, providing lower interest rates on new home and other retail loans, till January 31. SBI reduced interest rates on new home, car, truck and farm equipment loans by 50 to 200 basis points from October 8, 2007, as a special offer. On October 10, 2007, ICICI Bank, the largest private sector lender, cut interest rates on floating rate home loans by 50 basis points to 11 per cent and on other retail loans by 25-50 basis points.

SBI may offer employees stock purchase plan

While State Bank of India informed the BSE that its central board would meet on January 14 to consider issue of increase in the issued capital via the rights issue and Employees Stock Purchase Scheme, the announcement turned out to be a pleasant surprise for the bank’s employees. Mr. Prakash Gangal, Secretary, All India State Bank of India Employees Federation said ‘we had asked for Employee Stock Option (ESOP) or some quota for employees at concessional rate on November 26. The management had then stated that the matter would have to be referred to the Government and did not commit anything. Even last week, when we followed up on this issue, we learnt that they had not heard from the Government. We are pleasantly surprised now. We will have to wait and watch," he said when sought for his comment. He, however, pointed out that such of those who already had some shares of the bank would be eligible to apply for rights shares.