Purwar: On a high

Mumbai, Sept. 13: Stocks of three State Bank associates ? State Bank of Travancore, State Bank of Mysore and State Bank of Bikaner & Jaipur ? were on a high today.

The rally followed SBI chairman A.K. Purwar’s announcement that the shares of State Bank of Travancore (SBT) will be split.

Shares of SBT and the other two banks have a face value of Rs 100. This apart, individual shareholders can own only up to 200 shares.

Investor interest in these three counters grew after the SBI chief told a television channel that while SBT is likely to go in for a stock split, the ceiling on holding would also be removed. This led to expectations that all the associate banks will see their shares split.

Strong buying helped the SBT scrip touch an intra-day high of Rs 3777 after opening at Rs 2400. The share finally ended the day at Rs 3,558, a hefty gain of Rs 1,157.50 over its last close.

The shares of State Bank of Mysore (SBM) ended strong at Rs 3,715.95 over its last close of Rs 3,096.65, a rise of Rs 619.

The shares of State Bank of Bikaner & Jaipur (SBBJ) also finished on a higher ground at Rs 3,450.65 after beginning the day at Rs 2,490. The close marked a gain of Rs 1,061 over its last close.

In fact, both SBT and SBBJ were the highest gainers on the Bombay Stock Exchange today, recording gains of 48.22 per cent and 44.39 per cent, respectively.

A share split in these banks have widely been anticipated on the bourses. “A stock split is seen as a investor friendly move as such a step could make it more accessible to the retail investor. Coupled to that, if the management is also talking about removing restrictions on the number of shares that an individual could hold, the investor horizon expands even more,” said an analyst.

SBI has seven associate banks. Apart from SBM, SBBJ and SBT, they include State Bank of Hyderabad, State Bank of Patiala, State Bank of Saurashtra and State Bank of Indore. These seven banks have a combined network of over 4600 branches in the country.

However, these associate banks have not yet been legally merged with the country's largest bank. Though such a possibility has often been spoken about, Purwar has said in the past that such a merger would occur at “an appropriate time”. Yet an operational or a virtual merger of the State Bank of India with these seven banks are already on.

All the banks in the group are in the process of getting a common technology platform and business processes. It is expected that by the end of this year, the seven associate banks will be brought under the core banking network.