SBI to sharpen marketing focus

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NEW ROLE:The merger will also lead to faster rollout of digital initiatives across the

State Bank of India, which has started the process of merging its five associate banks and Bharatiya Mahila Bank, said it will redeploy its manpower in customer-facing roles with a sharper marketing focus.

“The same is expected to create a superior customer experience,” the lender said in a statement.

The six banks which will be merged with SBI have about 40,000 employees; post the merger the total staff strength of SBI will be 2,70,000.

Total number of SBI branches will be increased to 24,000 which is around 15,000 now.

SBI also said the merger will also lead to faster rollout of digital initiatives across the bank, which is currently hamstrung by existence of different entities with separate managements causing a lag in implementation across the SBI Group. “Consequently, customers of associate banks will benefit from new initiatives simultaneously,” it said.

Operating costs

On Thursday, the board of SBI approved the share swap ratio for the three listed associate banks, State Bank of Mysore, State Bank of Travancore and State Bank of Bikaner & Jaipur, and also for Bharatiya Mahila Bank.

State Bank of Hyderabad and State Bank of Patiala are 100 per cent owned by SBI. The merger is expected to be completed by March 2017.

The merger will result in reduction in operating costs, SBI said since there will be reduction in overheads, administrative offices and centralisation of treasury.

“India’s second largest bank post the mergers will be almost 1/4th of SBI in terms of total deposits and advances,” the lender said adding that post the merger, SBI will add Rs.8 lakh crore of assets.

The total business of the six banks put together, is almost equal to the size of the second largest lender in the country.

The bank expects that increased presence in all geographies will increase the bank’s capacity to raise deposits and bring down the cost of funds further.

“Thus, the benefit so derived will flow on to the customers in the form of improved services, borrowing costs etc.” it said.

Credit approval

The speed of credit delivery, particularly large credit approvals, will improve as instead of seven sanctions by seven banks, the customer will have to deal with a single credit approval process, it said. Similarly, the resolution measures of stressed assets will be quicker and decisive as the decision making will be centralised.

The bank said additional capital requirement will be not significant as the mergers will be met through the resultant increase in efficiencies and economies of scale.

“SBI is a well-capitalised bank with capital base well above the regulatory norms applicable to a Domestic Systemically Important Bank (D-SIB),” it added.