Merger with SBI strong catalyst for SBT and SBBJ

Re-surfacing of the buzz regarding consolidation of Indian public sector banks in recent times merits a re-look at the merger of State Bank of India’s (SBI) subsidiaries with itself. The consolidation will catapult SBI as one of the world’s top 10 largest banks. SBI has completed merger of two of its subsidiaries, namely State Bank of Indore and State Bank of Saurashtra earlier and now has five remaining subsidiaries.

Of these, three are listed i.e. State Bank of Travancore (SBT), State Bank of Bikaner and Jaipur (SBBJ) and  and State Bank of Mysore. Notably, these banks are trading at a sharp discount vis-à-vis their own historical average valuations as well as those of comparable peers such as Bank of Maharashtra, Andhra Bank, Dena Bank, amongst others. 

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