How does a 8 bit register bank hold 8 regsiters of 8 bits each?
Each address holds 8 bits. 32 addresses are set aside as registers, 8 bits each.  Each register bank has 8 registers in it.  Each register bank is 64 bits/8 bytes. 96 addresses are as RAM.  96+32 = 128 Bytes total.  It's just that the first 32 bytes are registers rather than RAM.  I think you may be getting bits mixed up with bytes.