Tag: PSU bank merger

M&A in the banking sector: Flashback and the road ahead

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Mrutyunjay Mahapatra

On March 31st, 2020, six PSU Banks were laid to rest as they amalgamated into four anchor banks. The process is done but not dusted. Before the amalgamation and after it, the media is curious about the way that it would play out. Stock market appeared more confused than usual. This state of uncertainty needs analysis of the design, best practices and experiences of amalgamation, so that the stakeholders as a larger group decide and express themselves well enough.

In his famous book “The Wisdom of Crowds”, James Srowiecki, tells that the knowledge of the leaders and decision makers is not enough for getting to the right solution and approach. It is always proven that larger groups of people are smarter than a few experts. So, we need to simplify the subject with background and fundamental knowledge.

Amalgamation, as a branch of study, belongs to the group called M&A, which has separate mathematics, economics, laws and its experts. Acquisition of a minority or a majority stake or an entire entity is driven by different considerations.

A Walmart’s acquisition of a Flipkart or an Infosys acquiring a Fintech are driven by different considerations from a Bank acquiring another. The unsuccessful attempt of India Bull Home Finance to acquire LMV, was probably a real M&A case study in the recent past in India. The amalgamations that got concluded recently were different from pure play amalgamation, which are aimed at and are anchored in pure economics of the transaction, often based on complex calculation of advantages present and future, but different from the most banking amalgamations that we have seen in India.

The recently concluded ones were more a reform and restructure to align the larger financial system to global experiences. The main owner of these Banks, that is the Government of India, based on larger intellectual consultations, designed and rolled out unification of entities, with a set of objectives. A few Banks were left out to pursue the regional character and to test the waters as smaller entities. The success of this ‘bimodal’ model will be research material for the future.

Looking at the last two decades of banking M&A in India, there are strong pointers to M&A activities in banking being anchored in rescue and rehabilitation. If we go slightly back in history from the BOB, Dena, Vijaya; and SBI associates mergers, HDFC Bank acquired Times Bank and Centurion Bank of Punjab (which had a triple amalgamation history of Bank of Rajasthan being taken over by Centurion Bank which later took over Lord Krishna Bank). In these cases, inorganic expansion of branch network, in addition to the financial status of the acquired entity were the ground trigger conditions.

Acquisitions of Bank of Madura, Bank of Rajasthan and Sangli Bank by ICICI Bank again were for similar considerations. Kotak Mahindra Bank acquiring ING Vyasa Bank in 2014, had a hint of economic M&A considerations, but the inorganic expansion combined with attractive value of the target due to financial consideration remained the main reason.

As compared to this, acquisition of GTB by OBC and Bharat Overseas Bank by IOB and the recent change in management of Yes Bank were all rescue acts. The change in management at RBL where a group of entrepreneurs came in to have management stake is an outlier of value creation through entrepreneurial intervention. So, what are common denominator and framework to examine the recent group of banking amalgamations along with whatever historical data that is available?

Nobel laureates Miller and Modigliani in 1961 propounded ‘Value creation’ as the core of all M&A activities. Value has very wider connotations. In his seminal work published by Mc Kinsey &Co, Tim Koller and is co-authors in recent days have elucidated the components of value, which mutatis mutandis, are applicable to all M&A, irrespective of the foundational objectives as discussed earlier in this article.

The difficulty of examining the real data in Indian banking M&A, to enable one to give a verdict on the success or failure of the transaction in achieving the objectives, is the lack of measurement and documentation of the actual results vis-à-vis what was projected at the time of the deal. Even in private sector deals, conclusion of the physical parts of the integration is often declared as a win.

Managements are loath to examine, much less publicize the difficulties and failures of their acquisitions. Even failed mergers like Centurion bank acquiring Bank of Punjab did not go beyond employee anecdotes.

What are the stated objectives of the current PSU amalgamations aimed at reform and restructure of the economy and the sector? Creating Banks of global scale and capital, a synergistic working rather than unnecessary competition in similar areas, Enhancement of capabilities of HR through lateral recruitment and better training, creating project funding and corporate credit skills beyond SBI, Rapid and at scale investment and implementation of

Digitalization for customer service, better ability to innovate products and processes and globally benchmarked risk management and compliance practices are some of the goals that these amalgamations aim to achieve.
If we examine the above from the framework of value creation, there are many convergences. Value creation is based on growth, risk management, rapid realignment of the business portfolios, properly leveraged capital structure, performance and cost management, transparency etc. Value gains in M&A are based on synergies, which are cost and revenue synergies, Cost and timing of the implementation and the processes to align and eliminate the divergences between intrinsic value and market value.

So, the integration committees formed in anchor and merging banks to align HR, financial, compliance, IT and other areas, will probably, in time or with some delay, complete the process. However, the aim is to get to the real value drivers as stated above. How soon, we could get to a level where number of project appraisal of large projects by different banks get aligned to their market share rather than 2 or 3 banks doing 95% of project appraisal.

Similarly, what is the time frame in which lateral movement of risk management and credit specialists shall be possible? Should the book value to market value ratios improve by 30 percent in the next two years in amalgamated Banks? What is the current aim to invest in digital, quantitatively and qualitatively? Should we have a separate ROI and valuation of the digital vertical pre and post amalgamation, so that we go beyond simplistic arithmetical sums? Tough questions, never answered in the past, but the whole aim is to get better! Unless managements and consultants create these matrices, the combined entities shall be bigger ones for sure, but objectives may remain unattained.

(The author is Former MD&CEO, Syndicate Bank and Former Deputy Managing Director SBI)

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PSU banks’ merger to come into effect from April 1, says Nirmala Sitharaman

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The merger of 10 public sector banks (PSBs) into four will come into effect from April 1, 2020, Finance Minister Nirmala Sitharaman said on Wednesday.

“The Union Cabinet has given its go-ahead for the merger proposal and the government has been in regular touch with these banks,” Sitharaman told reporters here.

There will be no regulatory issues, she added.

“The banks’ merger is on course and decisions have already been taken by the respective bank boards,” the minister said.

In August 2019, the government had announced four major mergers of public sector banks, bringing down their total number to 12 from 27 in 2017.

The mergers are aimed at creating global sized banks in India.

According to the plan, United Bank of India and Oriental Bank of Commerce will be merged with Punjab National Bank; Syndicate Bank will be merged with Canara Bank; Allahabad Bank will be amalgamated with Indian Bank; and Andhra Bank and Corporation Bank will be consolidated with Union Bank of India.

Last year, Dena Bank and Vijaya Bank were merged with Bank of Baroda. Prior to this, the government had merged five associate banks of SBI and Bharatiya Mahila Bank with the State Bank of India.

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PSU Bank merger: These stocks eroded half of shareholders’ wealth in 6 months

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The government’s plan to merge ten public sector banks has led to a massive eradication in the stock prices of these banks. The shares of these ten PSU banks witnessed a sell-off in the past six months since the announcement, eroding almost half of their shareholders’ wealth.

Six months ago on August 30, 2019, Finance Minister Nirmala Sitharaman announced a mega consolidation of 10 state-run lenders into 4 bigger banks.

According to the plan, Punjab National Bank, Oriental Bank of Commerce and United Bank will be merged to form the country’s second-largest PSU bank. State Bank of India (SBI) will still hold the spot of the largest lender in the country.

Canara Bank will be merged with Syndicate Bank to become the third-largest public sector lender.

Further, Union Bank of India, Andhra Bank and Corporation Bank will be merged to become the fifth-largest PSU bank. After the merger of Indian Bank and Allahabad Bank, the new entity will be the seventh-largest state-run lender.

Since the announcement of the merger, Nifty PSU bank index has plunged more than over 21 percent.

Among the shares of banks to be merged, PNB fell more than 31 percent, Oriental Bank of Commerce declined the most 99 percent and United Bank plunged 34 percent.

Canara Bank and Syndicate Bank have eroded shareholders’ wealth by more than 36 percent and 41 percent, respectively, since August 30, 2019.

Shares of Union Bank of India, Andhra Bank declined more than 34 percent and 35 percent, respectively. Corporation Bank shares fell the least by 13.52 percent since the merger announcement.

The shareholders of India Bank and Allahabad Bank have lost nearly 64 percent and 69 percent, respectively, in the past six months.

Meanwhile, except for Corporation Bank, shares of all other PSU banks mentioned above hit their fresh 52-week low on February 28.

The deadline for the merger is set on April 1, 2020. On Wednesday, Sitharaman said that the proposed merger of public sector banks is underway and will meet the implementation date of 1 April.

“We are going as per schedule on that. There is no uncertainty,” Sitharaman added.

Earlier in April 2019, Bank of Baroda became the country’s third-largest lender after its merger with Dena and Vijaya Bank.

At present, there are 18 public sector banks as compared to 27 in 2017. There will be only 12 public sector lenders after the mergers.

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Central trade union strike on January 8 likely to see participation of 25 crore people

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Around 25 crore people are expected to join the countrywide strike on January 8 called by ten central trade unions to protest against the government’s “anti-people” policies. The ten unions — INTUC, AITUC, HMS, CITU, AIUTUC, TUCC, SEWA, AICCTU, LPF, UTUC — as well as various sectoral independent federations and associations had adopted a declaration in September last to go on a nationwide strike on January 8, 2020.

“We expect participation of not less than 25 crore of working people in the forthcoming National General Strike on January 8, 2020, to be followed by many more actions seeking reversal of the anti-worker, anti-people, anti-national policies of the Government. The Ministry of Labour has failed to assure on any of the demands of workers which called a meeting on January 2, 2020. The attitude of the government is that of contempt towards labour as we construe from its policies and actions,” the 10 central trade unions (CTUs) said in a joint statement.

Apart from trade unions, about 60 organisations of students and elected office bearers of some universities will also be joining the strike with an agenda to raise voice against increased fee structure and commercialisation of education, the statement said.

The trade unions condemned the JNU violence and similar incidents in other university campuses and expressed their solidarity with students and teachers all over India.

The unions also expressed displeasure over no Indian Labour Conference being held since July 2015, codification of labour laws and privatisation of PSUs.

“As many as 12 airports are already sold out to private hands, 100 per cent sale of Air India is already decided, decision to sell BPCL taken, BSNL-MTNL merger announced and 93,600 telecom workers already thrown out of jobs under the garb of VRS (voluntary retirement scheme),” it added.

The unions are also against privatisation in railways, corporatisation of 49 defence production units and forced merger of banks.

Joint platform of more than 175 farmers and agricultural workers unions will extend its support to workers’ demands and observe January 8 as Gramin Bharart Bandh along with their charter of demands, they added.

Bankers, insurers to join strike

Major unions in the Indian banking sector have decided to participate in the National General Strike called by central trade unions on January 8, 2020, said a top leader of All India Bank Employees’ Association (AIBEA).

AIBEA general secretary C.H. Venkatachalam said in a statement that 10 central trade unions have given a National General Strike call for January 8 protesting against the anti-labour policies of the Central government and demanding job security, job creation, stop adversely amending labour laws and others.

According to Venkatachalam, in the banking Sector, the call has been jointly given by five unions i.e. AIBEA, AIBOA, BEFI, INBEF and INBOC.

In addition, employees of the Reserve Bank of India (RBI), Co-operative Banks, Regional Rural Banks (RRB), Life Insurance Corporation of India and General Insurance sector are also joining the strike, he added.

Shiv Sena to join Left-supported Jan 8 all-India strike

For the first time, the ruling ally in Maharashtra Shiv Sena will join the proposed all-India strike on January 8 called by Leftist parties, affiliated trade unions and different workers organisations.

Shiv Sena Rajya Sabha MP Sanjay Raut, who attended a press conference along with various Leftist unions heads and Communist leaders on Friday, announced the party’s decision to fully support and join the strike called for various demands of the working classes.

He said that in Maharashtra, there is a Shiv Sena-Nationalist Congress Party-Congress alliance Maha Vikas Aghadi government which is supported by the working classes.

MDMK, DMK to support Jan 8 strike by trade unions

The MDMK, DMK have expressed their support for the January 8 nationwide strike announced by the trade unions to protest against the anti-labour policies of the Centre.

In a statement issued in Chennai on Monday, MDMK general secretary Vaiko said the party has extended its support to the strike.

The DMK President M.K. Stalin in a statement said his party extends its support to the nationwide strike by trade unions pressing for 14 demands.

Stalin said the BJP-led government at the Centre, instead of protecting the workers’ rights, is focused on snatching them.

Mamata govt to oppose January 8 strike

West Bengal Chief Minister Mamata Banerjee on Monday said her government would oppose the January 8 strike called by the Central Trade Unions (CTUs) even though it supported the issues they have raised.

The strike has been called by ten CTUs along with various sectoral independent federations and associations demanding scrapping of the Citizenship (Amendment) Act (CAA), the National Population Register (NPR) and a proposed nationwide National Register of Citizens (NRC) besides a 12-charter of economic demands.

“There will be no strike or bandh (shutdown) in Bengal. What is the benefit of strikes and shutdowns? We want you all to continue a democratic movement,” Banerjee said at Gangasagar in 24 Parganas South district.

The Chief Minister said her government was opposed to strikes or shutdowns. “Since the time we came to power, we have not backed bandhs, though we have supported the issues. Our protest will continue. We are on the side of the citizens, for the rights of the citizens. But why should we go for a strike?” she said.

“As it is the country is incurring economic losses. If on top of that a strike is organised, there will be a loss of thousands of crores of rupees. The country will suffer,” she told mediapersons.

Banerjee said she did not want the people to be inconvenienced.

Banerjee and her party have launched a vigorous movement against the NRC, the CAA and the NPR by holding processions, rallies, street corners, public meetings across the state.

She has also time and again appealed to all parties and students and youths to join forces so as to launch a joint struggle against the centre’s BJP led NDA government.

-with inputs from agencies

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

RBI rate cut is the need of the hour, says IDBI Capital’s AK Prabhakar

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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India’s economic slowdown is likely to continue for another one to two quarters: That’s the view coming in from AK Prabhakar, head of research at IDBI Capital. In an interview with CNBC-TV18.com, Prabhakar said the government needs to do more to lift the sagging economy and support growth. He expects the Reserve Bank of India to cut interest rates in the October policy.

Here are the edited excerpts of the interview:

The market sentiment remains weak despite the government’s announcements. GDP growth has also slowed further, and the manufacturing is at a multi-year low. What is your reading of the situation?

Prabhakar: The slowdown is a combination of factors along with IL&FS crisis leading to credit flow stopping. The slowdown would last one-two more quarters post which government measures will help the recovery. However, more measures would be required to bring the economy back to higher growth.

How much of the slow down problem is a cyclical issue and how much is downright structural?

Prabhakar: This slowdown is more of a cyclical nature and with a combination of events making it look structural.

What are your views on the large dividend given by RBI to the government and how the government should use it?

Prabhakar: I leave it to the government to decide, but this would help the government in a big way.

Do you see further rate cuts from the RBI after Friday’s GDP data?

Prabhakar: I feel RBI may cut rates as it is the need of the hour.

It has been raining losses in the markets, where do you see there is an opportunity to buy?

Prabhakar: There are many stocks which are doing good in this market like private life insurance companies including HDFC Life, SBI Life, and ICICI Prudential Life. Hotel stocks also look very attractive. Indian Hotels, and Mahindra Holiday & Resorts India looks good. Also, defence stocks like BEL, Cochin Shipyard, and L&T can be preferred.

In this uncertain market scenario, should investors play safe and focus on defensives?

Prabhakar: We have limited play in the markets currently and prefer IPCA Labs, DMart, HUL, Trent, and Titan

How you are looking at the big PSU bank recapitalisation as well as mergers?

Prabhakar: The PSU Bank may take at least 2-3 years to give the desired benefit. Prefer SBI and Bank of Baroda, which have already gone through the process of merger. SBI, which is the market leader with 22,008 branches and almost 21 percent of the total banking business can be a rank outperformer among PSU banks.

The slowdown has affected auto sector quite badly. Are you hopeful that festive season will see some bit of an uptick?

Prabhakar: Auto sector slowdown is due to a few structural changes also, light commercial vehicle and heavy commercial vehicle slowdown would continue for some more time. Two-wheeler may rebound faster followed by passenger vehicles. In this space, we like Hero MotoCorp, Bajaj Auto, and Maruti Suzuki, companies with cash and market leadership in their respective segments.

The broader markets have been in a bearish mood for some time now. What’s your take on midcap and smallcap stocks.

Prabhakar: If we take mid-caps and small-caps, the markets have been correcting since February 2018 – almost 21 months. After the last 3-4 months of maximum pain, many quality mid-cap has seen very good recovery in the last few months.

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Closing Bell: Sensex tanks 770 points, Nifty below 10,800; PSU Banks index declined 5%, metals down 3%

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Indian shares dropped sharply to end over 2 percent lower on Tuesday after country’s economic growth in the first quarter of the current fiscal slipped to an over six-year low of 5 percent as consumer demand weakened and government spending slowed. The previous low was recorded at 4.9 percent in April-June 2012-13.

The fall was led by banking, metal and energy stocks. Major selling in index heavyweights like Reliance Industries Ltd, HDFC, ICICI Bank and HDFC Bank further dragged the indices. Meanwhile, the weak rupee also added to the losses. The rupee weakened to 72.03 against the dollar, versus its close of 71.41 on Friday.

The Sensex ended 770 points lower at 36,563, while the broader Nifty50 index lost 225 points to end the day at 10,798. In broader markets, the Nifty Midcap and the Nifty Smallcap index declined 1.8 percent each.

Meanwhile, stocks in Asia were also bruised as the United States began imposing 15 percent tariffs on a variety of Chinese goods on Sunday as Beijing initiated new duties on US crude.

Only Tech Mahindra and HCL Tech gained on the Nifty50, while all other stocks ended in the red. Tata Steel, UltraTech Cement, ICICI Bank, Titan and IOC were the top losers on the index.

All sectoral indices ended in red for the day. The Nifty PSU Bank index lost the most, down nearly 5 percent followed by the Nifty Metal, which fell 3 percent. Meanwhile, the Nifty Bank, the Nifty Private Bank and the Nifty Fin Services indices shed over 2 percent each. The Nifty Auto and Nifty Realty also lost 1.6 percent and 2.3 percent, respectively.

The Nifty PSU Bank index fell over 4 percent after the government announced a series of mergers involving 10 such banks to boost the struggling sector and revive economic growth. Indian Bank, Canara Bank, Punjab National Bank and  Union Bank of India tumbled between 5.8-12 percent.

Auto stocks were beaten after top automakers reported a slump in August sales over the weekend. The Nifty Auto index fell as much as 1.6 percent, with Tata Motors dropping 4.7 percent and Eicher Motors declining 3 percent. Bajaj Auto, Hero MotoCorp, Maruti Suzuki and M&M also plunged during the day.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Nifty Bank index plunges 370 points after PSB merger plan; PNB falls over 7%

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The Nifty Bank index slipped more than 1 percent on Tuesday after Finance Minister Nirmala Sitharaman announced the merger of PSU banks last week. The merger of 10 state-owned banks into four will strengthen the debt-laden sector and ensure stronger balance sheets, the minister said in the announcement made after market hours on Friday.

At 09:18 am, the Nifty Bank index was down 370.10 points, or 1.35 percent, at 27,065.15. Top laggards on the index were Federal Bank down 2.17 percent, Bank of Baroda declining 1.89 percent while State Bank of India lost 1.88 percent.

Other banking stocks also followed suit. Shares of Punjab National Bank (PNB) fell 7.5 percent on Tuesday. The lender on Saturday said its board of directors will meet on September 5 to consider its merger with Oriental Bank of Commerce and United Bank of India.

Shares of Indian Bank, Oriental Bank of Commerce, Canara Bank, Union Bank of India, and Allahabad Bank were down between 1.5-4.5 percent.

Indian financial markets were shut on Monday on account of a public holiday.

Under the merger plan, 10 PSU banks will be amalgamated into four entities. The merger will reduce the total number of state-owned banks to 12 from 27 in 2017.

Oriental Bank of Commerce (OBC) and United Bank of India (UBI) will be merged into Punjab National Bank (PNB), making it the second-largest PSU bank after SBI.

READ MORE: Mega PSU Bank Merger: Will it revive India’s banking sector?

Syndicate Bank with Canara Bank while Andhra Bank and Corporation Bank will be merged with Union Bank of India. Meanwhile, Allahabad Bank will merge with Indian Bank. This will make it the seventh-largest state-owned bank in India.

According to Morgan Stanley, the PSU bank consolidation is a good long-term move, but could weigh on the near-term growth. The brokerage remained ‘underweight’ on Punjab National Bank and Canara Bank post-merger announcement and reduced earnings/target across PSU banks.

Citi also believes that PSU Bank consolidation should strengthen the system. It also added that the consolidation will make capital and talent management easier.

Catch all the latest and live updates here on CNBC TV18 Market Live Blog.

Disclaimer: CNBCTV18.com advises users to check with certified experts before taking any investment decisions.

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Mega PSU Bank Merger: Will it revive India’s banking sector?

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The government last week announced the merger of 10 state-owned banks into four, saying the move was required to strengthen India’s banking system. As a result, the total count of PSU banks will now be reduced to 12 from 27 in 2017.

Oriental Bank of Commerce (OBC) and United Bank of India (UBI) have been merged into Punjab National Bank (PNB). PNB will now be the second-largest PSU bank after State Bank of India, which earlier saw a similar consolidation with all its associates merging with it.

Syndicate Bank has been merged with Canara Bank while Andhra Bank and Corporation Bank will be merged with Union Bank of India. Meanwhile, Allahabad Bank will merge with Indian Bank. This will make it the seventh-largest state-owned bank in India.

According to analysts, the announcement of PSU bank consolidation is a welcome move and a good first step in sustainably turning around the PSU banks.

“It also gives a positive signal that the government is not just focusing on recapitalizing the bank but also in improving the governance in the Public Sector Banks (PSBs). Measures taken to improve the efficiency of the PSBs is in the right direction as they are competing with the private sector,” said Deepthi Mathew, economist at Geojit Financial Services.

According to Anusha Raheja, BFSI Research Analyst at LKP Securities, the merger announcement would change the Indian banking landscape for the better. Various other governance reforms announced with respect to strengthening PSU boards will address their key legacy issues and bring them on par with private peers, he added.

JM Financial also believes the steps announced are progressive in nature.

“Consolidation of PSU banks was long overdue and it has finally arrived. The PJ Nayak committee had in 2014 recommended mergers of some of the banks along with greater freedom/power to the boards to take decisions on various matters of strategic significance. This should result in better management of leadership positions, greater control and accountability and easier administration from the government’s perspective,” the brokerage wrote in a note.

JM Financial remains cautious on PSU banks and has SBI and Bank of Baroda as its top picks in the space.

The PSU recapitalisation comes at a time when the country’s GDP growth slowed to 5 percent, signalling the economy has not yet entered the recovery path. Also, consumption is not picking up, which contributed to the overall slowdown.

VK Vijayakumar, the chief investment strategist at Geojit Financial Services, said the continuation of the slowdown in GDP growth was expected but the 5 percent growth in Q1 is worse than expected led by the decline in industrial production, the slump in auto space.

“But GDP growth figures will pick up in Q3 and Q4 benefitting from the low base of the previous financial year. Also, the rate cuts by the RBI will act strongly in Q3 and Q4 since monetary policy impacts with a lag of 2 to 3 quarters. We need structural reforms like labour and land market reforms to stimulate and sustain growth,” Vijayakumar added.

With the slowdown worsening, the government has now accelerated the pace of reform announcements over the past few weeks pushed by the slowdown in the economy and emboldened by the recent RBI fund transfer.

“The positive impact of the measures adopted by the central bank and the government to recoup the economy is expected to reflect in the coming quarters,” added Mathew.

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Here’s what bankers have to say about PSU bank consolidation and recapitalisation

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The government announced a series of mergers involving 10 state-owned banks on Friday. Under the merger plan announced by finance minister Nirmala Sitharaman, 10 PSU banks will be amalgamated into four entities.

Sitharaman said that Oriental Bank of Commerce and United Bank would be merged with New Delhi-based Punjab National Bank. This would create India‘s second-largest lender after State Bank of India

The government also announced that two lenders based in southern India, Canara Bank and Syndicate Bank, would be amalgamated. Syndicate Bank’s merger with Canara Bank will create the fourth largest PSU lender. The merger of Union Bank with Andhra Bank and Corporation Bank will create India’s fifth-largest PSU bank. Indian Bank and Allahabad Bank will merge to become the seventh-largest PSU bank.

ALSO READ: Government merges 10 public sector banks into four — Full coverage 

The government also announced a details of the bank recapitalisation road map. Punjab National Bank will get Rs 16,000 crore from the Rs 70,000 crore total and this will be the largest chunk. Union Bank wil get the second largest chunk worth Rs 11,700 crore.

ALSO READ: Breakup of the fresh money government is injecting into public sector banks

Sunil Mehta, MD & CEO of PNB said, “It is a very welcome move made by the government because we have the internal synergies. This particular amalgamation will give us three basic advantages. With Punjab National Bank (PNB) and Oriental Bank of Commerce having a common synergy area we can optimise on resource utilisation and whereas United Bank of India is rich in CASA and has a better presence in north east as well as in the eastern part of the country. So we will have a larger geographical presence across the country.”

J Packirisamy, MD & CEO of Andhra Bank said, “We are getting merged with Union Bank of India along with Corporation Bank. In our view it is an excellent combination. Andhra Bank is small and Corporation Bank is more strong in south as well as in other areas. Union Bank has presence in western part of the country. There are lot of synergies that we could look for. Union Bank as well as Andhra Bank has got a very young force. Andhra Bank is pretty strong in agriculture and financial inclusion initiatives. Union Bank is Mumbai based banks has its own strengths.”

Rajkiran Rai G, MD & CEO of Union Bank said, “It is more of a synergy because both the banks are coming from south. One is Andhra Bank and the other is Corporation Bank. It will be to our advantage because of the way we are spread in the country. In South India our spread is not that strong and so it will be good synergy.”

RA Sankara Narayanan, MD & CEO of Canara Bank said, “Combined entity will be 4th largest after the amalgamation. We are confident this will give us an opportunity to grow on all the segments particularly with quality.” He added, “We will be taking our proposal to board in maximum 10 days’ time and as far as the integration is concerned  – HR integration may take around 3-6 months’ time from the cut-off date and IT integration will take minimum 12 months though we are on the same platform. Customisation has to be done on our platform as well as Syndicate Bank platform. I am sure that will be a smooth transition.”

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This is the new pecking order of India’s public sector banks after government’s mega merger

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The government announced a mega merger of public sector banks and massive cash infusion, saying these moves were required to strengthen India’s banking system.

With 10 public sector lenders merged into four, India’s public sector banking landscape has undergone a radical change.

In terms of business size, this is how the new pecking order of banks in India will be:

1. State Bank of India: Rs 52.05 lakh crore.

2. Punjab National Bank + Oriental Bank of Commerce + Union Bank of India: Rs 17.94 lakh crore.

3. Bank of Baroda (including Vijaya Bank and Dena Bank): Rs 16.13 lakh crore.

4. Canara Bank + Syndicate Bank: Rs 15.20 lakh crore.

5. Union Bank + Andhra Bank + Corporation Bank: Rs 14.59 lakh crore.

6. Bank of India: Rs 9.03 lakh crore.

7. Indian Bank + Allahabad Bank: Rs 8.08 lakh crore.

8. Central Bank of India: Rs 4.68 lakh crore.

9. Indian Overseas Bank: Rs 3.75 lakh crore.

10. UCO Bank: Rs 3.17 lakh crore.

11. Bank of Maharshtra: Rs 2.34 lakh crore.

12. Punjab & Sind Bank: Rs 1.71 lakh crore.

Figures as of March 2019

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