Page 28 - Banking Finance January 2022

ARTICLE

nationalized in 1980. In this period 13 mergers took place 8.08 lakh crore business. The combined entity would
mostly between public and private sector banks. have 6,060 branches, a network of 2,870. Indian Bank
was strong in south India and the merger of Allahabad
The post liberalization period, which stretches from 1991- Bank will give it wide access to north and east India,
2015, saw major economic reforms initiated by Government where the latter is stronger.
of India. Many new policies were framed. Greater FDI and
Y Most of these banks were listed entities. So, as target
foreign investment was allowed which saw resurgence in
banks will cease to exist, shareholders of these banks
Indian Banking. As many as 22 mergers took place - some
were allotted shares of the anchor bank. For every 1,000
to save weaker banks and some for the sake of synergic
shares of Syndicate Bank, 158 equity shares of Canara
business growth. Bank were given. Similarly, an exchange ratio of 1,150
shares of PNB for every 1,000 shares of Oriental Bank
Few Examples of Bank Mergers in the of Commerce and 121 equity shares of PNB for 1,000

Past shares of United Bank was fixed. Those holding 1,000
shares of Allahabad Bank were allotted 115 shares of
Kotak Mahindra Bank and ING Vysya Bank merger and
Indian Bank. For every 1,000 equity shares of Andhra
amalgamation of Centurion Bank of Punjab Ltd. with HDFC
Bank, 325 shares of Union Bank were allotted and for
Bank took place in 2014 and 2008, respectively.
every 1,000 shares of Corporation Bank, 330 Union
Bank shares were given.
The merger of Oriental Bank of Commerce with Global Trust
bank in 2004 saved the latter after its net worth had wiped Y After the merger, there are 12 PSUs: Six merged banks
off and also handed OBC a million depositors and a decent and six independent public sector banks.
market in South India. Mergers of Punjab National Bank O Six merged banks - State Bank of India, Bank of
(PNB) with the then eroded New Bank of India (NBI) in 1993- Baroda, Punjab National Bank, Canara Bank, Union
94 and that of Benaras State bank Ltd with Bank of Baroda Bank of India, Indian Bank.
in 2002 also proved to be life saving for the weaker bank. O Six independent banks - Indian Overseas Bank, Uco
Bank, Bank of Maharashtra, Punjab and Sind Bank,
Here are a few aspects of the PSU bank merger Bank of India, Central Bank of India.
that came into force with effect from 1st April
Y There shall be no immediate branch closures in any of
2020: the banks. In future, if there are some closely located
Y The amalgamation of Oriental Bank of Commerce (OBC) branches of the two/three banks, they may be merged/
and United Bank of India into Punjab National Bank shifted with prior notice to customers.
(PNB) makes it the second-largest public sector bank in Y While the merger may have been effective from April
the country, after State Bank of India (SBI). The new 1, the integration of all the processes and technology
entity has a business of Rs 17.95 lakh crore and 11,437
branches, and combined strength of over 1 lakh
employees.
Y The amalgamation of Syndicate Bank into Canara Bank
created the fourth-largest public sector bank with Rs
15.20 lakh crore business and a network of 10,391
branches, 12,829 ATMs and a combined strength of
91,685 employees.
Y The amalgamation of Andhra Bank and Corporation
Bank into Union Bank of India created India's fifth-
largest public sector bank with Rs 14.59 lakh crore
business and 9,609 branches.
Y The amalgamation of Allahabad Bank into Indian Bank
created the seventh-largest public sector bank with Rs

28 | 2022 | JANUARY | BANKING FINANCE