PNB could merge OBC, Andhra Bank, Allahabad Bank, say reports
22 May 2019
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State-run Punjab National Bank (PNB) could take control of two or three smaller peers that could include Oriental Bank of Commerce, Andhra Bank and Allahabad Bank, reports citing sources close to the development said.
This is part of the government’s ongoing efforts to consolidate banking services and streamline the financial sector. In the second round of consolidation after merger of SBI and its subsidiaries, the government last month merged Vijaya Bank and Dena Bank with Bank of Baroda to form India’s second-largest bank.
The strategy is to merge smaller, regional banks with better managed bigger banks so as to have a better national reach.
The government sees this as a better way to reduce bad loans that stand at more than Rs9,00,000 crore, forming nearly 5 per cent of the nation’s gross domestic product.
Last year, the government managed to hand over IDBI Bank, a bigger lender with one of the highest levels of bad loans on its books, to state-owned Life Insurance Corporation, in a bid to ensure that the bank remained well capitalised.
Reports said PNB could start the process of taking control of the banks in the next three months.
PNB shares fell as much as 4 per cent following news of the possible development. Its shares ended down 2.55 per cent at Rs86.10 on National Stock Exchange on Tuesday.
Allahabad Bank fell 2.6 per cent to close at Rs45.15 a share, while Oriental Bank of Commerce ended down nearly 1 per cent at Rs95.20 a share.
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