Tag: Corporation Bank

RBI approves amalgamation of 10 public sector banks from April 1

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

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The Reserve Bank of India on Saturday said it has approved the amalgamation of Oriental Bank of Commerce and United Bank of India into Punjab National Bank, Syndicate Bank into Canara Bank, Andhra Bank and Corporation Bank into Union Bank of India and Allahabad Bank into Indian Bank.

The scheme will come into force with effect from April 1, 2020 and all the branches of Oriental Bank of Commerce and United Bank of India will function as branches of PNB branches; Syndicate Bank branches into Canara Bank branches; Andhra Bank and Corporation Bank branches into Union Bank of India branches and Allahabad Bank branches into Indian Bank branches.

Following the consolidation, there will be seven large public sector banks and five smaller ones. There were as many as 27 PSBs in 2017.

The merger would result in creation of seven large PSBs with scale and national reach, with each amalgamated entity having business of over Rs 8 lakh crore.

The anchor bank Punjab National Bank will become the country’s second largest bank, with business size of Rs 17.94 lakh crore, after SBI which has business of over Rs 52 lakh crore.

Bank of Baroda will become the third largest bank, followed by Canara Bank, Union Bank of India, Bank of India, and Indian Bank. The other PSBs are Central Bank of India, Indian Overseas Bank, UCO Bank, Bank of Maharashtra, and Punjab and Sind Bank.

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

In a first, 8 banks announce share swap ratios for proposed mergers

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

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With the March-end deadline for the biggest-ever amalgamation scheme is approaching, eight state-owned banks on Thursday announced swap ratios for the proposed mergers.

Punjab National Bank (PNB) in a regulatory filing announced the share exchange ratio in accordance with the scheme of amalgamation, as it is set to merge Oriental Bank of Commerce (OBC) and United Bank of India (UBI) into itself with effect from April 1.

PNB’s board in its meeting on Thursday has approved for amalgamation of OBC and UBI, Punjab National Bank said in a BSE filing.

According to the swap ratio, 1,150 equity shares of PNB are to be exchanged for every 1,000 equity shares of Oriental Bank of Commerce, while 121 equity shares of PNB are to be swapped for every 1,000 equity shares of UBI.

A Grievance Redressal Committee headed by Vijay Kumar Vyas, a retired judge of Rajasthan High Court, has been set up to address the grievances of shareholders.

The committee is intended to address those shareholders who either individually or collectively hold at least 1 percent of the equity capital of any of PNB, OBC or UBI; or 100 shareholders acting collectively, of any of PNB, OBC or UBI.

“The board of directors of the bank…have fixed Wednesday, March 25, 2020, as the record date for issuing and allotting equity shares of the PNB to the shareholders of OBC and UBI as per the share exchange ratio,” PNB said in the filing.

Meanwhile, Andhra Bank on Thursday also announced the swap ratio for its merger, it said in a filing. Andhra Bank and Corporation Bank are to be amalgamated into Union Bank of India with effect from April 1, 2020.

Andhra Bank said, “Further, the board of directors of the bank at its meeting held on March 5, 2020, has approved the equity share exchange ratio for amalgamation of Andhra Bank into Union Bank of India for 325 equity shares in Union Bank of India for every 1,000 equity shares in Andhra Bank.”

Union Bank in a separate exchange filing said its board at its meeting on Thursday has also approved the equity share exchange ratio. It includes 325 equity shares of Union Bank of India for every 1,000 shares in Andhra Bank and 330 shares in Union Bank for every 1,000 equity shares in Corporation Bank.

Also, for Syndicate Bank’s merger into Canara Bank, the share swap is 158 equity shares of Canara Bank for every 1,000 equity shares of Syndicate Bank.

The lenders in their respective filings to the exchange said their boards have approved the amalgamation of Syndicate Bank into Canara Bank.

For these two banks, an expert committee (Grievance Redressal Committee ) is to be headed by K N Keshavanarayana, former judge of the High Court of Karnataka, to address the grievances of minority shareholders.

The Union Cabinet on Wednesday had okayed the amalgamation of 10 public sector banks to create four large state-owned lenders with effect from April 1, 2020.

According to the mega consolidation plan, OBC and UBI will merge into PNB; Syndicate Bank into Canara Bank; Andhra Bank and Corporation Bank into Union Bank of India; and Allahabad Bank into Indian Bank.

After the mergers, there will be seven large public sector banks (PSBs) and five smaller ones.

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.

The anchor bank Punjab National Bank will become the country’s second-largest bank, with business size of Rs 17.94 lakh crore, after SBI which has a business of over Rs 52 lakh crore.

Bank of Baroda will become the third-largest bank, followed by Canara Bank, Union Bank of India, Bank of India, and Indian Bank. The other PSBs are Central Bank of India, Indian Overseas Bank, UCO Bank, Bank of Maharashtra, and Punjab and Sind Bank.

The stock of PNB on Thursday closed at Rs 44.90 on the BSE, up 1.01 percent from the previous close, while Union Bank of India’s shares jumped 8.25 percent to Rs 39.35 apiece. Canara Bank rose marginally by 0.40 percent to close at 139.45 apiece.

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Corporation Bank shares zoom nearly 10% on remarkable Q3 results

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

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Shares of Corporation Bank on Friday zoomed nearly 10 percent after the company reported a seven-fold increase in consolidated net profit in December quarter. The scrip climbed 9.68 percent to close at Rs 25.50 on the BSE. During the day, it jumped 16.12 percent to Rs 27. On the NSE, it advanced 9.89 percent to close at Rs 25.55.

In terms of traded volume, 6.93 lakh shares of the company were traded on the BSE and over 89 lakh on the NSE.

Public sector lender Corporation Bank on Friday said its consolidated net profit increased seven fold to Rs 420.83 crore in third quarter ended on December 31, 2019, on higher interest income, albeit provisions for bad loans surged.

The bank had posted a net profit of Rs 59.94 crore during the corresponding period a year ago.

Income increased to Rs 6,051.93 crore, from Rs 4,112.29 crore, the lender said in a regulatory filing.

On a standalone basis, the net profit increased to Rs 420.68 crore in third quarter ended on December 31, 2019, from Rs 60.53 crore a year ago.

In absolute terms, the gross NPAs stood at Rs 19,557.16 crore in the quarter under review, as against Rs 21,921.42 crore a year ago.

Net NPAs for the said quarter were valued at Rs 6,321.81 crore, down from Rs 13,521.22 crore in the year-ago quarter.

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

UCO Bank, Corporation Bank rally up to 19% post approval of insolvency law amendments

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

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Shares of UCO Bank and Corporation Bank rallied up to 19 percent on Friday amid reports that payments from Essar Steel resolution are likely to arrive this month. Also that the Cabinet cleared amendments to the insolvency law.

At 9:30 AM, shares of UCO Bank, Corporation Bank and IDBI Bank were trading 12.54 percent, 10.11 percent and 6.10 percent respectively. On an intraday basis, the shares rallied 18.81 percent, 15.78 percent and 9.89 percent on the NSE.

The Union Cabinet on Wednesday approved changes to the insolvency law, including a provision to ring-fence successful resolution applicants from criminal proceedings with regard to offences committed by previous promoters of a company.

The amendments to the Insolvency and Bankruptcy Code (IBC) are aimed at removing certain difficulties being faced during insolvency resolution process to realise the objects of the Code and to further ease doing of business, an official release said.

Furthermore, on November 15, the Supreme Court of India pronounced that the resolution of Essar Steel would proceed as per the proposed resolution plan of October 18.

The apex court accepted Arcelor Mittal’s offer to pay an aggregate of Rs 42,000 crore as an upfront amount to the secured financial creditors of bankrupt Essar Steel, before December 31.

The Committee of Creditors approved the distribution of Rs 12,000 crore to SBI, Rs 2,282 crore to IDBI Bank and about Rs 1,400 crore to Corporation Bank.

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

Bank mergers to help India get closer to $5 trillion economy dream

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

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This was on the cards for a long time. The finance minister had announced a series of mergers involving public sector banks (PSBs). The move will cut down the number of PSBs to 12 from 27. This may be termed as the next best thing that can happen to the banking industry after the ‘bank nationalisation’ in the year 1969.

Punjab National Bank, Oriental Bank of Commerce and United Bank are merging to become the second largest Public Sector bank after State Bank of India. SBI still holds the coveted role as the largest PSB in India. Syndicate Bank and Canara Bank are merging to be the fourth largest PSB. Union Bank, Andhra Bank and Corporation Bank are merging to become the fifth largest PSB, while Indian Bank and Allahabad Bank are merging to become the seventh largest.

The book size or the total business is also expected to be leveraged by the mergers. The second largest PSB is expected to have a total business volume of over Rs 18 lakh crore. The merger of Canara Bank and Syndicate Bank as the fourth largest PSB is expected to have a Rs 15.2 lakh crore business volume. The fifth largest PSB of Union Bank, Andhra Bank and Corporation Bank merger is expected to have a Rs 14.6 lakh crore business volume.

The bank merger is expected to benefit various stakeholders. The mergers may help the banks by scaling up quickly and get a large number of new customers. This will help the banks with more capital to lend and invest. This will also increase their geographical footprint across the country and internationally. Small banks can also increase their efficiency to international standards. Banks which can only dream of Basel III standards can now make it practical and approachable. Merger can help in offering more products and better service to the customers. Consolidation of the banking sector will also reduce the unhealthy competition prevalent between the banks now. This is also beneficial to the bank staff as it will increase their bargaining strength for better wages. Banking technology will also improve once the mergers happen.

But this merger comes with its own cost. A few mergers take into consideration only the banks. It fails to consider the people or the employees involved in such mergers. Many employees lose their promotions, some lose their seniority. They are sometimes forced to report to much junior professionals. This leads to discontentment and ultimately employee dissatisfaction and demotivation. Though the merger did happen on the books, the merger ultimately fails.

The merger sometimes may lead to closure of branches in the same area. This will lead to employee relocation or even job losses or voluntary retirement schemes. This may ultimately create unemployment situation and law and order problems or social disturbances. Each bank functions with its own processes and cultures. Mergers will lead to conflict of such processes and cultures. Much of the senior management’s time will be devoted to addressing such conflicts than the growth of the bank.

The merger has not come as a surprise. The various committees set up earlier for banking reforms had also suggested mergers. These committees include Narasimham committee (1991 and 1998) and Khan committee in 1997. The Reserve Bank of India had set up a Verma committee in 1999 to identify and examine the problems of weak banks and their restructuring. The Verma panel had also suggested bank merger as a step for financial restructuring among the weak banks. It was only a matter of time before the government stepped in to consolidate the banking structure. The strong Modi government made it happen.

In fact, one of the reasons for the success of SBI was its size. The bigger bank helps in more independent decision making. They don’t have to be dependent on the central government. Mergers will also lead to less bureaucracy and faster decision making. The banks have to take advantage of synergy and should not clone itself to one of the merging banks. It should take advantage of large-scale operations. It is a good beginning and a good strategy to strengthen the financial base of the economy to get into the $5 trillion economy in the next five years.

K Satish Kumar is a keynote speaker, author, the Global Head of Legal and Chief Data Protection Officer of Ramco Systems. Among the many awards he has received, the coveted are ‘Top 50 Legal Leaders 2019’ by Legal IP Gorilla in Singapore,  ‘GC PowerList India 2018’ by London-based Legal 500  and ‘Legal Counsel of the Year -2018’ by INBA. He is actively involved in many pro bono activities through Chennai Lawyers. The author can be reached at getksk@gmail.com. The views expressed are personal.

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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

Union Bank board okays Andhra, Corporation Bank merger; clears Rs 17,200 crore capital infusion

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

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Union Bank of India on Monday said its board of directors has approved merger of Andhra Bank and Corporation Bank with itself and given nod for a capital infusion of Rs 17,200 crore in the current financial year.

The decision was taken at the meeting of the board of directors held on Monday, the bank said in a regulatory filing.

The board “considered and given its in-principle approval for the amalgamation of Andhra Bank and Corporation Bank into Union Bank.
“And, (the board also) approved the revised capital plan for 2019-20 to raise capital funds by an amount not exceeding Rs 17,200 crore within which up to Rs 13,000 crore through equity capital and up to Rs 4,200 crore through additional tier I/II bonds,” it said.

The bank added that the board has okayed capital raising by issue of equity shares through preferential allotment to the government for an amount up to Rs 13,000 crore, subject to other regulatory approvals.

Finance Minister Nirmala Sitharaman had on August 30 announced a mega merger of pubic sector banks, whereby the number of such banks would now come down to 13 from 19 at present.

In the latest round, as many as 10 banks will be merged into four banks.

Among others, Delhi-headquartered Punjab National Bank will merge Oriental Bank of Commerce and United Bank of India with itself, Canara Bank will merge Syndicate Bank into it while Allahabad Bank will be consolidated with Indian Bank.

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

Of the other banks in public space, Indian Overseas Bank, UCO Bank, Bank of Maharashtra and Punjab & Sind Bank will continue to function as earlier as they have strong regional focus, Sitharaman had said.

Shares of Union Bank of India on Monday rose 2.27 percent to close at Rs 56.25 on the BSE.

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