Thursday, June 9 2005 16:19 Hrs (IST) - World Time -

Mumbai: State Bank of India (SBI) is likely to merge its seven associate banks in the next two years and look at acquiring a public sector bank at an appropriate time to emerge as mega-size financial sector player.

SBI and its seven associate banks are already working on integration of some functions and have 25 per cent market share of the banking system, SBI Chairman A K Purwar told reporters after inaugurating the new office building of local head office of the bank's Mumbai circle in Mumbai today (Jun 9, 2005).

These seven associate banks are already working in co-ordination for treasury function and IT platform, which would help to work as virtually integrated entity, he said.

Purwar said five years down the line there could be one bank, an entity formed through merger of associate banks. This could happen even before, in about two years, he added.

The Government would have to put in place facilitating legal environment for consolidation, he said.

SBI managing director Ashok Kini said that a large size entity is crucial to compete with global banks and the country's largest commercial bank would look at acquiring public sector bank when the time is ripe.

Kini, however, did not elaborate on the consolidation strategy.

On having financial statements compliant with world standards, Purwar said, The SBI balance sheet and accounts would be made according to GAAP standards by March 2006.

Internally, the work has already progressed to prepare the balance sheet according to the international norms, Purwar added.