Moneycontrol
/home/moneycontrol/commonstore/commonfiles/headband_data_live.json
Array
(
    [0] => Array
        (
            [title] => Exclusive keynote by MSME Minister Nitin Gadkari at Small Business Virtual Summit with CISCO on 17th July - Register Now
            [lp_url] => https://www.moneycontrol.com/cisco-smb-virtual-summit/?utm_source=moneycontrol&utm_medium=headband&utm_campaign=cisco_smb
            [ga_event_tracker] => Array
                (
                    [category] => Register-webinar
                    [action] => From-Home
                    [label] => Register-webinar
                )

            [start_date] => 2020-07-08 00:00:00
            [start_date_epoch] => 1594146600
            [end_date] => 2020-07-10 16:00:00
            [end_date_epoch] => 1594377000
            [rank] => 1
        )

    [1] => Array
        (
            [title] => LIVE Webinar: RSI - 5 Star Trading Strategy Webinar by Vishal B. Malkan . Watch Now!
            [lp_url] => https://www.moneycontrol.com/ms/malkansviews/?utm_source=Moneycontrol&utm_medium=Headdband
            [ga_event_tracker] => Array
                (
                    [category] => Watchnow-webinar
                    [action] => From-Home
                    [label] => Watchnow-webinar
                )

            [start_date] => 2020-07-10 16:00:00
            [start_date_epoch] => 1594377000
            [end_date] => 2020-07-10 17:00:00
            [end_date_epoch] => 1594380600
            [rank] => 2
        )

    [2] => Array
        (
            [title] => Tune in on 17th July for the Small Business Virtual Summit with Cisco. Register now!
            [lp_url] => https://www.moneycontrol.com/cisco-smb-virtual-summit/?utm_source=moneycontrol&utm_medium=headband&utm_campaign=cisco_smb
            [ga_event_tracker] => Array
                (
                    [category] => Register-webinar
                    [action] => From-Home
                    [label] => Register-webinar
                )

            [start_date] => 2020-07-10 17:00:00
            [start_date_epoch] => 1594380600
            [end_date] => 2020-07-17 11:00:00
            [end_date_epoch] => 1594963800
            [rank] => 3
        )

    [3] => Array
        (
            [title] => Special Offer: Subscribe to Moneycontrol PRO at ₹1 per day for the first year. Use Coupon: PRO365.
            [lp_url] => https://www.moneycontrol.com/promos/pro.php
            [ga_event_tracker] => Array
                (
                    [category] => PRO365
                    [action] => From-Home
                    [label] => Ribbon
                )

            [start_date] => 2020-07-17 11:00:00
            [start_date_epoch] => 1594963800
            [end_date] => 2020-07-31 23:00:00
            [end_date_epoch] => 1596216600
            [rank] => 4
        )

)
Array
(
    [count] => 1
    [data] => Array
        (
            [0] => Array
                (
                    [title] => Tune in on 17th July for the Small Business Virtual Summit with Cisco. Register now!
                    [link] => https://www.moneycontrol.com/cisco-smb-virtual-summit/?utm_source=moneycontrol&utm_medium=headband&utm_campaign=cisco_smb
                    [ga_event_tracker] => Array
                        (
                            [category] => Top Band
                            [action] => Virtual Summit
                            [label] => From-Home
                        )

                )

        )

)
Tune in on 17th July for the Small Business Virtual Summit with Cisco. Register now!
Last Updated : Aug 19, 2016 11:13 AM IST | Source: CNBC-TV18

NPA of consolidated book may be 50 bps higher post merger: SBI

Larger gains from the merger of associate banks will be seen only over 1-2 years, B Sriram, MD and Group Executive- National Banking at State Bank of India.

The board of country's largest lender, State Bank of India (SBI), has approved the merger of its associate banks—State Bank of Bikaner and Jaipur, State Bank of Mysore, State Bank of Travancore— along with Bhartiya Mahila Bank, with itself.

Speaking to CNBC-TV18, SBI's MD and Group Executive- National Banking B Sriram said larger gains from merger will be seen in another 1-2 years.

SBI is trying to align 70 percent of the gross non-performing loans (NPLs) of the associate banks with itself and post merger NPA on consolidated book could be roughly 50 basis points higher than SBI's current NPA level, he noted.

The management has taken best evaluation methods to justify the swap ratios, he said, adding, not various other parameters apart from the NPLs went into making the merger process smooth. 

Below is the transcript of B Sriram’s interview to Sonia Shenoy, Anuj Singhal and Latha Venkatesh on CNBC-TV18.

Latha: Big thumbs-up coming in from the markets for the merger itself. Your first take. Immediately, there would be costs? Should we expect that in the first year, that is in FY17 itself, it will be the costs of merger that we have to come to terms with and the gains are in FY18?

A: The larger gains probably will come in the next year or two. But the short-term gains which are in terms of closing down certain administrative offices like local head offices (LHO) and also in terms of the treasury book getting merged. Those gains will be the first six months itself. You can start to look at some of these gains.

Latha: How will the non-performing loan (NPL) picture look? Mrs Bhattacharya had said that there is going to be one more quarter of recognition before the asset quality review in the subsidiary banks come to your level. So should we go with current levels or should we expect a slight uptick in the merged entity?

A: If you see the NPL levels, actually between SBI and the consolidated book, there is a difference of about 50 basis points. We are at 6.94 and the consolidated level is about 7.4. The associate banks, the loan book is about 30 percent of the parent book and if you further drill down into the associate banks’ loan portfolio, you would find that about 70 odd percent is common accounts that is there with the SBI. The remaining 30 percent is either common between the associate banks or they are standalone credits. Now, of these 70 percent which is common between SBI and the associate banks, what we are trying to do over the last two quarters is to try and align these NPLs on this 70 percent with the parent. And in that, one half of the work is done in Q1 and we will like to complete the job by end of Q2.

Sonia: Can you give us some numbers because the gross non-performing assets (NPA) of all the associate banks at this point in time stand at about 9.1 percent. How much will the gross NPAs of the associate banks rise to before the merger and by when will this clean up of all the associate banks be completed?

A: As I said, the gross NPLs of the associate banks, while it is at 9.1 percent, on a combined basis, because of the larger impact of the parent, the net impact is just about 50 basis points. So, as I said, of this 70, I cannot really look at giving you any exact guidance on that, but on the 70 percent which were to be aligned, we have aligned about 50 percent of that. So, we would imagine that we will have a better picture as we go to the Q2 results.

Anuj: Just a near-term irritant for State Bank of Mysore (SBM) shareholders. They might be feeling a bit short changed, because the other banks got a decent ratio, but SBM shareholders are losing out. If you could tell us in terms of the swap ratio, what was the thinking behind that?

A: The thinking on the swap ratio was to be consistent, was to be as transparent as possible. And to make sure that the global practices for valuation are consistently applied across these four banks. And that is what it is. So, while there could be different swap ratios for each of these banks, the end result, but if you see the process behind it has been quite fair and consistent. And we have taken the best valuation methods and we have done it independently by valuers and surely, there is a justification for all the swap ratios, how it has turned out to be.

Latha: One of the guesses that I was making is that in SBM, we saw 1 percentage point rise in gross NPLs in the last quarter, whereas in State Bank of Travancore (SBT) we saw almost a doubling from 4.5 percent to 9 percent. So, is it that SBT recognised more than SBM and that is why the merger ratio is a little to the disadvantage of SBM? We should expect more recognition?

A: There were various factors which were considered. One of it of course, the different valuation methodologies, one is of course the market price and the comparable companies method and also the net asset value (NAV) of these banks. Also, we did make sure that the impact of post announcement has not really played a large role because the date that we have taken was May 16, which was just prior to the date on which the announcement was made in the public domain. And thereby, if you see some of these valuations prior to that, you will find that all the banks have been fairly assessed and the swap ratio has been determined accordingly.

In addition to that, if you do a comparable companies methodology and all these along with the various parameters that are there for each of these banks, it is not only the NPLs, but also in various other parameters, around 10-15 parameters that we had compared then. And this same methodology and consistency has been put across the four banks. The other thing is of course, it is not a standalone valuation that we are looking at. It is actually a swap valuation, swap ratio and it is a relative valuation between the parent and the individual banks.
First Published on Aug 19, 2016 11:13 am
Sections