The board of Canara Bank has given in-principal approval to the merger with Syndicate Bank. Finance Minister Nirmala Sitharaman had announced consolidation of 10 state-run banks into four large-scale banks on August 30.
"The Board of Directors of the Bank in its meeting held today, considered and decided to give its "in-principle approval" for amalgamation of Canara Bank and Syndicate Bank, as advised by the Alternative Mechanism of Government of India vide its letter dated 30.08.2019 and to commence the process of amalgamation subject to applicable approvals," Canara Bank said in a stock exchange filing on Friday.
Canara Bank has been designated as the anchor bank in this amalgamation. The merged entity will be the fourth largest public sector lender in India with business of Rs 15.2 lakh crore. Merger of Canara Bank and Syndicate Bank will also create the third largest branch network in India with 10,342 branches.
The NPA ratio of the merged lender is expected to be 5.62 per cent, as opposed to 5.37 per cent for Canara Bank and 6.16 per cent for Syndicate Bank, as on August 30, 2019. The amalgamated bank will have a workforce of 89,885 employees - 58,350 from Canara Bank and 31,535 from Syndicate Bank. Centre has promised that there will be no retrenchment during or after the merger.
Under the latest round of bank consolidation, United Bank of India and Oriental Bank of Commerce are to be merged with Punjab National Bank, making the amalgamated entity the second largest public sector bank. Allahabad Bank will be merged with Indian Bank, whereas Andhra Bank will take over Corporation Bank and Union Bank of India.
During its meeting on Friday, the Canara Bank board also approved capital infusion of up to Rs 9,000 crore by the Centre for preferential allotment of bank's equity shares to the government.
The share allotment will be at a price determined in terms of SEBI (ICDR) Regulations, subject to necessary regulatory approvals, Canara Bank said in its statement. "Convening Extraordinary General Meeting/ postal ballot notice for obtaining shareholders approval for Capital infusion by GOI, will be intimated separately in due course," the lender further said.