Union Bank of India, Andhra Bank and Corporation Bank to complete merger by 1 April 2020
23 December 2019
Three public sector banks – Union Bank of India, Andhra Bank and Corporation Bank – have unanimously agreed on creating organisational structure by 1 April to give effect to their merger to create a larger entity.
Union Bank of India, Andhra Bank and Corporation Bank have zeroed in on the 'best of three approach' that would manage cultural integration of the three in the run up to their amalgamation, as the merged entity targets handling double the volume of the combined current
As per the consolidation plan for state-run banks unveiled by the finance minister announced in August, the merger of Union Bank of India, Andhra Bank and Corporation Bank would create the fifth largest bank in India.
Under the PSU banks recapitalisation plan, Union Bank of India will get Rs11,700 crore in fresh funding, helping the merged entity to reduce losses and improve credit flow.
Post-merger, PNB will be the second largest PSB, Oriental Bank of Commerce third, Canara fourth, UBI fifth Andhra Bank sixth and Allahabad seventh biggest lenders.
After the merger, the number of India’s public sector banks drops to 12 from 27 earlier.
Union Bank of India will be anchor lender in the third merger to create the fifth largest public sector bank with a total business size of Rs14.59 lakh crore. The merged entity will be double the current size of Union Bank.
The merger between Allahabad Bank and Indian Bank will result in the seventh largest banking behemoth with total business size of Rs8.08 lakh crore.
Earlier, in two rounds of bank mergers India’s largest lender State Bank of India (SBI) had merged five associate banks and Bharatiya Mahila Bank with itself while Dena Bank, Vijaya Bank were merged with Bank of Baroda earlier this year.
Giving approximate estimates for PSU bank recapitalisation, the finance minister said PNB will be given Rs10,000 crore, Union Bank of India Rs11,700 crore, BoB Rs7,000 crore, Canara Bank Rs6,500 crore, Indian Bank Rs2,500 crore, IOB Rs3,800 crore, Central Bank Rs3,300 crore, Uco Bank Rs2,100 crore, United Bank of India Rs1,600 crore and PSB Rs760 crore.
A total of 34 functional teams have been formed to smoothen the process of merger of United Bank of India (UBI), Punjab National Bank (PNB) and Oriental Bank of Commerce (OBC), a senior official said.
All mergers are scheduled to come into force from 1 April next year.