Latest Bank merger news of PSU banks and PSU Insurance Company

 

A government document shared on social media has triggered speculation about possible PSU bank mergers between Union Bank and UCO Bank, and Bank of India and Bank of Maharashtra. The document, whose source couldn't be verified, said that a Parliamentary committee will hold discussions with four PSU banks in the first week of January under banking laws, which govern mergers and acquisitions, among other things.

However, the government has not yet provided official information regarding the merger. Neither of the four PSU banks mentioned have made any stock exchange filings in this regard.

The document being circulated on X (formerly Twitter) is a government PDF issued in the name of Ramesh Yadav, Under Secretary of the Government of India. The letter is issued to the Governor, Reserve Bank of India, Chairman of LIC, IRDAI, and NABARD, along with MD and CEOs of UCO Bank, Bank of Maharashtra, Bank of India, and Union Bank of India.

The PDF is also addressed to CMDs of New India Assurance Company, United India Insurance Company, Oriental Insurance Company, National Insurance Company, and MD & CEO of SBI Life Insurance Company. The subject of the alleged government PDF states 'Study Visit programme of the Committee on Subordinate Legislation, Lok Sabha to Mumbai and Goa from 2 to 6 January 2024'.

The 2-day programme includes informal discussions with the representatives of Union Bank of India and UCO Bank on January 2, and with representatives of Bank of Maharashtra and Bank of India on January 4, 2024, on rules/regulations framed under Banking Regulations Act 1949 and other relevant Acts as applicable to them and the regulatory mechanism in post-merger scenario.

The Finance Ministry has reportedly issued a clarification, saying that this is a parliamentary committee on subordinate legislation, and it has no connection whatsoever with the policies of bank mergers, according to CNBC-Awaaz. Amid the merger buzz, the ministry reportedly changed the agenda of its meeting. According to the new agenda, there is no mention of the word “Merger”, which simply means that there is no proposal for a merger between Union Bank of India and UCO Bank, Bank of India, and Bank of Maharashtra, said CNBC Awaaz in its report.

Meanwhile, No proposal to merge the public sector banks is being considered by the government and the discussions were part of a ‘routine exercise, Reuters also reported citing two sources from the Ministry of Finance.

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Cabinet approves RBI's proposal to merge Lakshmi Vilas Bank with DBS Bank, all branches to function as DBS Bank, says RBI

Union Cabinet on Wednesday approved the merger of capital-starved Lakshmi Vilas Bank (LVB) with DBS Bank India. The Reserve Bank of India on 17 November proposed the merger of the 94-year-old lender with the Indian arm of Singapore’s DBS Bank. As part of the amalgamation, DBIL will infuse fresh capital of Rs.2,500 crore into LVB.

The central bank on 17 November placed Lakshmi Vilas Bank under one-month moratorium, superseded its board and capped withdrawals at Rs.25,000 per depositor. "With the merger, there will no further restrictions on the depositors regarding the withdrawal of their deposit," Union minister Prakash Javadekar said.

Analysts and global credit rating agencies have applauded RBI's move and said that it will benefit both parties. "The quick action taken by the RBI in the Laxmi Vilas Bank matter affirms the faith of the depositors in the banking system," Ajay Shaw, Partner, DSK Legal.

"LVB merger with another bank is a very prudent step in order to save the depositors and to mitigate the systematic disruption associated with it. The image of government and regulator gets enhanced by such timely action and response," said S Ravi, former chairman of Bombay Stock Exchange (BSE) and Managing Partner of Ravi Rajan & Co.

DBS was the first foreign bank to receive a banking licence after the central bank allowed foreign banks to set up a wholly owned subsidiary in 2014. "With DBS likely to use digital capabilities to enhance its physical footprint in India, the proposed deal could lead to a 30-40% increase in Indian assets of DBS," said JPMorgan analysts Harsh Wardhan Modi and Saurabh Kumar.

The regulator had put LVB under Prompt Corrective Action in September 2019. The lender earlier reported widening of its net loss at Rs.397 crore in the second quarter ended September 2020 due to rise in bad loans and provisions. On 25 September, the shareholders of the bank had voted out seven members from the board, including the then MD and CEO S Sundar. The RBI on 27 September appointed the CoD composed of three independent directors Meeta Makhan, Shakti Sinha, and Satish Kumar Kalra, being headed by Meeta Makhan.

Moody’s said the merger will strengthen DBS’s business position in India by adding new retail and small and medium-sized customers.

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Merger News: Mega merger of 10 PSU banks takes effect; all you need to know

The merger of ten government-run banks into four will come into force from April 1. The branches of the merging banks will operate as branches of the banks in which they have been merged. Customers of merging banks will also now be treated as customers of the banks in which these banks have been merged. The banks' merger was announced last year in August and the union cabinet gave the final approval on March 4. In the past, various other bank mergers have taken place. For instance, in 2017, the country's largest public lender - the State Bank of India took over five of its associates and Bharatiya Mahila Bank. Last year, Vijaya Bank and Dena Bank were merged with Bank of Baroda. Kotak Mahindra Bankcand ING Vysya Bank merger and amalgamation of Centurion Bank of Punjab Ltd. with HDFC Bank took place in 2014 and 2008, respectively.

Here are a few aspects of the PSU bank merger:

1. As per the latest merger- Oriental Bank of Commerce (OBC) and United Bank of India (UBI) will be merged with Punjab National Bank (PNB). The merged entity will become the second-largest state-run bank. The new entity will have a business of Rs 17.95 lakh crore and 11,437 branches.

2. The amalgamation of Syndicate Bank into Canara Bank will create the fourth-largest public sector bank with Rs 15.20 lakh crore business and a network of 10,324 branches.

3. Allahabad Bank branches will operate as those of the Indian Bank. The merger of Allahabad Bank with the Indian Bank will create the seventh-largest public sector bank with Rs 8.08 lakh crore business.

4. Branches of Andhra Bank and Corporation Bank will function as the branches of Union Bank of India. Andhra Bank and Corporation Bank's merger with Union Bank of India will create India's fifth-largest public sector bank with Rs 14.59 lakh crore business and 9,609 branches.

5. The government had front-loaded Rs 68,855 crore to take care of the bank-merger plan.

6. Punjab National Bank was given Rs 16,091 crore, Union Bank of India Rs 11,768 crore, Canara Bank Rs 6,571 crore and Indian Bank Rs 2,534 crore. Allahabad Bank was provided Rs 2,153 crore, United Bank of India Rs 1,666 crore, Andhra Bank Rs 200 crore, Indian Overseas Bank Rs 4,360 crore and UCO Bank Rs 2,142 crore.

7. According to the government, the merger of the 10 banks will lead to the creation of stronger establishments. This merger would follow in the example of the amalgamation of Bank of Baroda, Vijaya Bank, and Dena Bank last year.

8. With this mega-bank mergers, the number of PSBs will get consolidated from 27 banks in 2017 to 12 banks in 2020.

9. The new 12 public sector banks will be -- six merged banks and six independent banks. State Bank of India, Bank of Baroda, Punjab National Bank, Canara Bank, Union Bank of India, Indian Bank will be the six merged banks. And Bank of India(BoI), Central Bank of India, Indian Overseas Bank, UCO Bank, Bank of Maharashtra and Punjab and Sind Bank, which have a strong regional focus, will remain independent entities.

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PSU banks announce share-swap ratios ahead of April 1 merger

Following the footsteps of State Bank of India and Bank of Baroda, the boards of 10 public-sector banks on Thursday approved mergers and issued share-swap ratios to create four large banks in the economy.

The four anchor banks will be Punjab National Bank, Canara Bank, Union Bank of India, and Indian Bank. The merger will be effective from April 1.

Last year, Bank of Baroda took over Vijaya Bank and Dena Bank. Before that, State Bank of India (SBI) had merged all its five associate banks with itself to enter the global top 50 banks’ list in terms of size. Punjab National Bank (PNB) will merge with United Bank of India and Oriental Bank of Commerce to create the largest bank in the country after State Bank of India.

According to notifications to the stock exchanges, Delhi-based PNB will issue 1,150 shares for 1,000 shares of Oriental Bank of Commerce, and 121 shares for 1,000 shares of United Bank of India.

Mumbai-based Union Bank of India will take Andhra Bank and Corporation Bank. Union Bank of India will issue 325 shares for 1,000 shares of Andhra Bank, and 330 shares for 1,000 shares of Corporation Bank.

Bengaluru-based Canara Bank will issue 158 shares for 1,000 shares of Syndicate Bank.

Allahabad Bank said for every 1,000 shares (face value Rs 10) of Allahabad Bank, there would be 115 shares (face value Rs 10) of Indian Bank.

The Union Cabinet had approved the consolidation to build the mega banks “to create more efficient and bigger public sector banks in the challenging environment to meet the credit needs of a growing economy and to achieve operational efficiency by scale of business”. The amalgamation will lead to a wide geographical reach, technology adaption, and, more importantly, better utilisation of scarce capital.

A grievance redress system has been put in place, and a committee has been formed headed by a retired judge. If shareholders have any issue with the swap ratio — for example, if they feel they didn’t get enough time or if they need information — they can raise it. This is the board-approved swap ratio.

“After the committee receives all the grievances, it will have seven days to recommend changes, if needed, which will be the final swap ratio,” said a top official of a PSB to be merged.

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Merger News: Cabinet approved plan for banking game-changer , 10 PSBs to turn into four big banks

The Cabinet has approved the consolidation of 10 public sector banks (PSBs) into four 'mega banks', Finance Minister Nirmala Sitharaman announced today. The Union Cabinet, she said, has given a go-ahead for the merger proposal and the government has been in regular touch with these banks.

"The banks' merger is on course and decisions have already been taken by the respective bank boards," she said. The Narendra Modi government had announced the mega merger in August last year.

As per the plan, United Bank of India and Oriental Bank of Commerce would merge with Punjab National Bank , making the proposed entity the second largest public sector bank.

Syndicate Bank will be merged with Canara Bank , and Allahabad Bank with Indian Bank . Similarly, Andhra Bank  and Corporation Bank  are to be clubbed with Union Bank of India.

Bank unions, who believe the merger is not a solution to the banking sector's problems, are opposed to the move.

The idea had been first publicly mooted in December 2018 when the RBI said that India could create some global banking majors if the then-ongoing mergers of some state-owned banks achieve the desired impact of creating stronger and well-capitalised lenders of global scale.

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Strike call by union this month to protest against merger of PSU banks

Days after bank unions called off a three-day bank strike from March 11, two unions called for another bank strike on March 27 to oppose the mega merger of PSU banks. Finance Minister Nirmala Sitharaman announced yesterday that the Union Cabinet has approved the plan to merge 10 PSU banks into four larger banks. The merger comes into effect from April 1 this year.

The All India Bank Employees' Association (AIBEA) and All India Bank Officers Association (AIBOA) have given a joint call for an all-India bank strike on March 27. Their demands include stopping the proposed merger of 10 PSU banks, stopping the privatisation of IDBI Bank and rollback of banking reforms, recovery of bad loans and increase of interest rate on deposits.

C.H. Venkatachalam, general secretary, AIBEA, said, the unions have planned series of protests this month peaking with the strike on March 27. The Bank Employees Federation of India (BEFI) has also announced a fortnight-long agitation programme to protest against the merger."Banks themselves face problems due to huge pile of bad loans. While the public sector banks made a total gross profit of Rs.150,000 crore for the year ended March 31, 2019, because of total provisions towards bad loans, etc. amounting to Rs.216,000 crore, the banks ended in a net loss of Rs.66,000 crore," Venkatachalam said.

Sitharaman, on the other hand, said the merger plan would enhance customer convenience, better branch service, higher credit flow, and lesser time in loan sanctions. Greater scale and synergy through consolidation would lead to cost benefits which should enable the PSBs enhance their competitiveness and positively impact the Indian banking system, a Finance Ministry statement said.

As per the amalgamation plan, United Bank of India and Oriental Bank of Commerce would be merged with Punjab National Bank, making the proposed entity the second largest public sector bank. It was decided to merge Syndicate Bank with Canara Bank, while Allahabad Bank with Indian Bank. Similarly, Andhra Bank and Corporation Bank are to be consolidated with Union Bank of India.

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Kotak proposes ‘six-three-three’ formula for public sector banks

The chairman and managing director of the Kotak Mahindra Financial institution, Uday Kotak, on Friday proposed diluting authorities stake to underneath 50% in three of the 12 direct-owned banks and running the opposite three below public-non-public partnership.

“After the merger of varied direct-owned banks, we’re now the total map down to 12 direct-owned banks. I quiet divulge that now we want to catch a six-three-three system. Six banks ought to live within the general public sector. In three others, direct possession ought to transfer underneath 50%. And for the others, we ought to mediate out of the sphere and salvage out a transparent map for public-non-public partnership, with domestic and non-domestic avid gamers,” Kotak said, whereas speaking at the Asia Economic Dialogue (AED) in Pune.

He said India used to be at the cusp of making some serious selections within the financial sector and folk well-known to ask some sophisticated questions. “India nationalized its banking device in 1969. I desire some evaluation on the quantity of taxpayers’ cash that has been attach into these banks from 1969 to 2020…Then now we want to ask that over a duration of 70 years, what’s the return to the Indian taxpayers on the crores of rupees which were attach into the direct-owned banks?” Kotak said.

Kotak said he didn’t advocate transferring faraway from direct-owned banks, but direct possession, in a pair of of them, would possibly per chance per chance unbiased be diminished.

He added that he saw a skill battle for the worldwide financial technology train within the raze, between Western and Chinese systems, currently exemplified by the discuss over 5G wireless applied sciences that had been being aggressively marketed by Chinese corporations.

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Govt likely to notify merger of 10 PSBs this week; process to be completed by April

Centre on August 30 last year announced four major mergers of public sector banks, bringing down their total number to 12 from 27 in 2017. The move was aimed at making state-owned lenders global sized banks

Each bank is required to follow regulatory norms to protect minority stakeholders' interests

The Centre will likely notify the merger of 10 public sector banks to create four big banks this week. Once notified, board members of these banks will give their approval swap ratio for the mergers. Each bank is required to follow regulatory norms to protect minority stakeholders' interests. Reports say all 10 banks will complete the merger process by April.

"We are expecting the government to notify the merger this week," United Bank of India managing director Ashok Kumar Pradhan said, The Economic Times reported.

In the biggest consolidation exercise in the banking space, the government on August 30 last year announced four major mergers of public sector banks, bringing down their total number to 12 from 27 in 2017. The move was aimed at making state-owned lenders global sized banks.

United Bank of India and Oriental Bank of Commerce will be merged with Punjab National Bank, making the proposed entity the second largest public sector bank (PSB). Syndicate Bank will be merged with Canara Bank, while Allahabad Bank will be amalgamated with Indian Bank. Similarly, Andhra Bank and Corporation Bank will be consolidated with Union Bank of India.

Post the consolidation, Punjab National Bank will have a business size of Rs 17.94 lakh crore, becoming the second-largest PSB after SBI with a business of Rs 52.05 lakh crore. The consolidated Canara Bank will be the fourth-largest bank with a business of Rs 15.2 lakh crore, followed by Union Bank of India at Rs 14.59 lakh crore. After subsuming Allahabad Bank, Indian Bank will be the seventh-largest state-lender with business size of Rs 8.08 lakh crore.

Bank of Baroda, after the merger with Vijaya Bank and Dena Bank, had become the country's third-largest bank. It has a business of Rs 16.13 lakh crore.

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