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No assurance on write-offs due to merger, says SBI

SBI is in process of integrating merged entities' operations with its own to leverage cost

Press Trust of India  |  New Delhi 

No assurance on write-offs due to merger, says SBI

The country's largest lender has said write-downs or write-offs on account of the of five associates cannot be entirely ruled out.

In the largest consolidation in the space, five associate and Bharatiya Mahila were merged on April 1 with SBI, putting the lender in the league of top 50 global

is currently in the process of integrating the merged entities' operations with its own to and operational efficiencies.

"There can be no assurance that the will not have to undertake write-downs or write-offs in connection with the merger, which could have a negative impact on its financial condition and of operations," said SBI's offer document for the recently conducted Rs 15,000 crore share sale through private placement while highlighting the risk factors.

The issue earlier this month was lapped up by foreign as well as domestic institutional investors.

In its annual report (2016-17), had said the long- term benefits of the would significantly outweigh the near-term challenges.

"The resulting cost advantage, enhanced reach and economies of scale from this will help SBI sustain its mission of being an enduring value creator," it said.

The offer document placed before the institutional investors further said the "may also incur additional costs" towards integrating operations and harmonising functions pursuant to the merger.

"In particular, the absorption of over 70,000 employees of the merged entities is expected to increase employee benefit expenses, mainly accruing out of liabilities with respect to the provision of additional superannuation benefits," it said.

Prior to the merger, SBI had 2,09,572 employees.

First Published: Tue, June 13 2017. 17:38 IST