The board of Indian state-owned lender Canara Bank has given the in-principle nod for its combination with domestic peer Syndicate Bank.
The merger is said to create the fourth largest public sector lender in India. The combined bank will have the third largest branch network in the country with 10,342 offices.
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Canara Bank will serve as the anchor bank in the amalgamation.
The board also approved the capital infusion of up to INR90bn ($1.26bn) by the Indian government for preferential allotment of the bank’s equity shares to the latter.
In a statement, Canara Bank said that the share allotment will be carried out at a price determined in terms of SEBI (ICDR) Regulations, subject to regulatory approvals.
The decision follows the move announced by the Indian government last month to combine ten state-owned lenders into four entities. The latest round of consolidation is aimed at bolstering the banking sector struggling with growing NPAs.
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By GlobalDataThe plan included merging Canara Bank with Syndicate Bank.
The other proposed amalgamations are combining Oriental Bank of Commerce and United Bank with Punjab National Bank.
The plan also includes the merger of Andhra Bank and Corporation Bank with the Union Bank of India, which already secured the in-principal approval from the Andhra Bank board.
Besides, the mega-merger plan includes Indian Bank merging its operations with Allahabad Bank.
The government further announced that there will be no redundancies resulting from these mergers.
