Union Bank Board Approves Merger Of Andhra Bank, Corporation Bank With Itself
The decisions were taken at a board meeting held on Monday, Union Bank of India said in a regulatory filing.
The board has "considered and given its in-principle approval for the amalgamation of Andhra Bank and Corporation Bank into Union Bank.” The board has also approved capital infusion not exceeding Rs 17,200 crore—Rs 13,000 crore will be raised via preferential allotment of equity shares to the government and up to Rs 4,200 crore through additional Tier I/II bonds.
The fundraising plans are subject to regulatory approvals, the bank said.
On Aug. 30, Finance Minister Nirmala Sitharaman said the government will merge 10 public sector banks into four, bringing down the number of PSU banks to 12 from 21.
The PSU bank mergers would help in better management of capital, said Sitharaman while announcing the proposal as a part of larger banking reforms. According to the plan:
- Punjab National Bank will take over Oriental Bank of Commerce and United Bank
- Canara Bank will take over Syndicate Bank
- Union Bank of India will take over Andhra Bank and Corporation Bank
- Indian Bank will be merged with Allahabad Bank
Consolidation among public sector banks has been on the agenda for the National Democratic Alliance since 2014, when it first came into power.
In 2017, State Bank of India was merged with five of its associate banks and Bharatiya Mahila Bank. In 2018, the government decided to merge Bank of Baroda with Vijaya Bank and Dena Bank. The government also allowed Life Insurance Corporation of India to take over 51 percent equity in IDBI Bank Ltd., effectively privatising it.
On Monday, Union Bank shares rose 2.27 percent to Rs 56.25 apiece on the BSE while the benchmark Sensex gained 0.44 percent to end the day at 37,145.45 points.