MERGER OF PUBLIC

SECTOR BANKS
How beneficial is the merger of Banks?
 INTRODUCTION:
• In Indian banking sector Mergers and acquisition has
become admire trend throughout the country.

• A large number of public sector banks and other banks

are engaged in mergers and acquisition activities in
India.

• The main motive behind mergers in the banking sector is

to harvest the benefit of economics of scales.

• Mergers can be a large source of growth in any economy

but particularly in one that’s comparatively stagnant and
mired in deep uncertainty.

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 TOP 10 PUBLIC SECTORS BANKS
1. State Bank of India(SBI)

2. Bank of Baroda(BOB)

3. Punjab National Bank(PNB)

4. Canara Bank

5. Bank of India(BOI)

6. Union Bank of India

7. Central Bank of India(CBI)

8. IDBI Bank

9. Syndicate Bank

10. Indian Bank

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Merger list of public
sector banks in India:

Acquirer Banks Banks to be Merged

1. Punjab National Bank(PNB) • Oriental Bank of Commerce and United

Bank of India
2. Indian Bank
• Allahabad Bank
3. Canara Bank • Syndicate Bank

4. Union Bank • Andhra Bank and Corporation Bank

5. Bank of Baroda • Dena Bank and Vijay Bank

• State bank of Hyderabad, State bank of

6. State Bank of India
Mysore, State bank of Bikaner &
Jaipur, State bank of Patiala, State
bank of Travancore, Bhartiya Mahila
bank
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Reason for mergers banks
• Mergers seek to improve Income from services.
• The government’s move to consolidate 10 public sector banks into four large ones is sensibly
aimed at improving operating efficiency, governance and accountability and facilitate effective
monitoring.
• The mega-merger involves integration of six weaker PSU banks with four better performing
‘anchor’ banks.
• The rationale is evident—banks saddled with bad loans or weak operating metrics are to be
integrated with stronger, more efficient banks.
• Besides, banks working on a similar technology platform (core banking solutions) are being
merged to ensure smooth integration.
• To support this consolidation, the government will be infusing capital into the anchor banks so
that transition does not translate to sacrificing growth.

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 HOW FINANCIALS OF ANCHOR BANKS WILL
CHANGE AFTER MERGERS

Source: Kotak Securities

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BENEFITS OF BANK MERGERS
1. Scale
2. Efficiency
3. Business Gaps filled
4. Talent and team upgrade

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 DANGERS OF BANK MERGERS
1. Poor culture fit
2. Not enough commitment
3. Customer impact and perception
4. Compliance and risk consistency

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CONCLUSION:
• Bank consolidation is a tricky issue.
• While it is said that the long term benefits of
consolidation outweigh the short term concern, it must
not be made a general policy.
• It is only to be done with right banks for right purpose
with proper safeguards.

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THANK YOU

P R E S E N T E D BY:
V R A G H AV E N D R A
SRN:R18MB264

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