Public sector lenders Punjab National Bank (PNB) and Union Bank of India on Thursday said their boards have approved the merger ratios for amalgamation with four other banks as part of the government's exercise to merge 10 banks into four.
Syndicate Bank shareholders will get 158 shares of Canara Bank for every 1,000 shares of their bank, according to a regulatory filing on Thursday.
While Oriental Bank of Commerce (OBC) and United Bank of India will merge with PNB, Andhra Bank and Corporation Bank will merge with Union Bank of India. According to regulatory filings, shareholders of OBC and United Bank of India will get 1,150 shares and 121 shares of PNB, respectively, for every 1,000 shares of their parent bank. Meanwhile, shareholders of Andhra Bank and Corporation Bank will get 325 and 330 shares, respectively, of Union Bank of India for every 1,000 shares of their bank.
The other banks set to be merged are Indian Bank with Allahabad Bank, and Canara Bank with Syndicate Bank. However, these banks have not yet disclosed the merger ratios.
The Union cabinet on 4 March approved the consolidation of 10 public sector banks (PSBs) into four entities, a move aimed at having fewer but stronger lenders in India.
“The amalgamation is being done so that customers are able to reap the benefit of larger banks being scaled up and more funds being available for credit," finance minister Nirmala Sitharaman told reporters on 4 March. She added that banks are fully on board and this will be effective from 1 April.
“To a large extent, I am convinced that the banks are on course. They have no issues carrying forward with the merger activity…core interest for banking, customers have been kept in mind," she said.
Shares of Union Bank of India closed at ₹39.35 (up 8.25% from previous close), Andhra Bank closed at ₹13.52 (3.76% higher) and Corporation Bank closed at ₹19.05 (2.14% higher). Shares of Punjab National Bank on BSE closed at ₹44.9 (1% higher than previous close), Oriental Bank of Commerce closed at ₹47.05 (up 15.89%) and United Bank of India at ₹7.5 (3.03% higher).
In the merger of Bank of Baroda (BoB) with Dena Bank and Vijaya Bank, shareholders of Vijaya Bank and Dena Bank got 402 and 110 equity shares of BoB for every 1,000 shares they held. In April 2017, State Bank of India (SBI) merged five of its subsidiaries—State Bank of Bikaner and Jaipur (SBBJ), State Bank of Mysore (SBM), State Bank of Travancore (SBT), State Bank of Hyderabad (SBH) and State Bank of Patiala (SBP)—and Bharatiya Mahila Bank (BMB) with itself.
The move, which made SBI one of the world’s top 50 large banks in terms of assets, saw 4,000 employees from SBI and the associate banks opting for voluntary retirement.