Three SBI associate banks zoom 20%

The shares of three associate banks of State Bank of India (SBI) hit their upper limit of 20 per cent today on news about rights issue and speculation of a possible merger with the parent.

State Bank of Mysore rose 20 per cent, or Rs 184.30, to Rs 1,105.95 on the Bombay Stock Exchange (BSE). On Saturday, the public sector lender said its board would meet on August 25 to decide the record date as well as the ratio and pricing of its proposed rights issue.

The shares of other two banks, State Bank of Bikaner & Jaipur (up 20 per cent to Rs 685.70) and State Bank of Travancore (up 20 per cent to Rs 902.30), rose on expectation of their merger with SBI. These three were among the top 10 gainers on BSE on Monday. “There is a possibility of merger of these two banks with SBI,” said Kishore Otswal, chairman and managing director of CNI Research.

Last month, the government passed an order for merging State Bank of Indore with SBI with effect from August 26.

A senior SBI official said, “There is no specific plan as of now to integrate other associate banks expeditiously with the parent.”

SBI shares rose 1.4 per cent, or Rs 38.95, to Rs 2,822.60 in a flat Mumbai market. The Sensex closed up 0.04 per cent, or 7.53 points, at 18,409.35.