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Mergers and acquisitions

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akshay mohite

70 Points Posted on 26 September 2020

i have query about mergers in banks like SBI MERGERS That if SBI have owned the debentures in their subsidiaries banks how those debentures amount get settled by SBI after MERGERS As after debetures are shown on the asset side of SBI will now shown where as whose gone to pay the amount to Sbi for that
how the accounting process and overall settlement process take place ?

Replies (4)

Quick Summary

This discussion clarifies the accounting treatment for debentures held by SBI in its subsidiary banks during mergers. When SBI merges with a subsidiary, the debentures are effectively cancelled through an accounting entry, eliminating them as both an asset for SBI and a liability for the subsidiary. No actual cash settlement occurs, as the ownership simply transfers to the parent company.

Rohit Patel

35 Points Posted on 27 September 2020

I guess following entry will be passed :-
Debentures a/c Dr. (of the subsidiary)
To Debentures a/c ( SBI )

akshay mohite

70 Points Posted on 28 September 2020

And pls tell HOW the amount get settled.

Rohit Patel

35 Points Posted on 30 September 2020

There won't be any settlement only above entry will be passed to eliminate asset and liabilities in their respective books,after merger the owners of SBI's subsidiary will get ownership in SBI so even if amount is settled it will be like taking money out from an owner's pocket and putting it back in owner's another pocket.