AIBEA Wants PMC Bank to be Merged with any Public Sector Bank

                                  

Though the 11th Bipartite Wage revision of the Public Sector Banks are still pending for more than two years with the reason of higher Non performing assets (NPA), the employees union of the Public Sector Bank, All India Employees Association (AIBEA) geenral secretary has requested the finance minister to merge the defunct Punjab & Maharashtra Co-operative Bank with a Public sector Bank and lift the ban on withdrawal limit.

He said " it is necessary to lift the present ban and order the takeover of this Bank by a Public Sector Bank (PSB). We strongly feel that the City Co-Operative Urban Bank is a fit case for being merged with a Public sector Bank and its present licence should be cancelled forthwith.

Mr Venkatachalam also appealed to Finance Minister Ms Sitharaman to merge all Co-op Banks into PSU banks to avoid loot of deposits in the hands of political leaders who normally control them and convert the deposits into bad loans and put the depositors in dire financial stress when RBI applies the brakes through Audit and Inspection Department (AID) by applying 35 A restrictions, Make RBI accountable as single window to all depositors in Indian Union rather than dual reporting to RBI and Registrar of Co-op Societies in case of Co-op banks and in the bargain having no accountability with both washing off their responsibilities.

I don't know what to say about AIBEA approach but I believe that at this moment the much needed work is to settle the long pending salary of the bank employees and it is to remind the AIBEA leadership that there are more employees and their dependents suffering due to non settlement of the 11th bipartite as compare to PMC bank. First to look after the hunger of our own house than others.

Source - bipartitesettlement.com

Read More

Share swap ratio of PSU bank after mega merger

ICICI Securities (I-Sec) on Tuesday estimated that Syndicate Bank shareholders would get 140 shares of Canara Bank for every 1,000 shares of Syndicate Bank, while Allahabad Bank shareholders would get 176 shares of Indian Bank for every 1,000 shares of Allahabad Bank.

As per estimation that while Oriental bank of Commerce (OBC) shareholders would get 1130 shares of Punjab National Bank(PNB) for every 1000 shares of OBC.United Bank of India shareholders would get 160 shares of Punjab National Bank(PNB) for every 1000 shares of United Bank of India,as a part of merger swap ratios.

Similarly Andhra bank shareholders would get 330 shares of Union Bank of India for every 1000 shares of Andhra Bank.Corporation Bank shareholders would get 320 shares of Union Bank of India for every 1000 shares of Corporation Bank.

Read More

Was the exclusion of four banks a political gameplan?

Political considerations could possibly have been at play in the case of four out of six public sector banks that have been excluded from the mega merger announced by the governmenton Friday.

For example, with Maharashtra Assembly elections scheduled to take place in October, Bank of Maharashtra (BoM) may have been left out of the scheme of things vis-a-vis amalgamation.

A merger announcement involving BoM, which is the convener of the State-Level Bankers’ Committee (SLBC), at this stage could have given the Opposition parties a stick to beat the ruling party with during election campaign. SLBC is a consultative and co-ordination body of all financial institutions operating in each state.

With two Kolkata-headquartered public sector banks (PSBs) – Allahabad Bank and United Bank of India – set to be merged with other larger banks, the government would have felt the need to ensure that at least one PSB (UCO Bank) continues to be headquartered in India’s largest city in the East, which is the hotbed of trade union activities. Moreover, this decision comes in the backdrop of the BJP trying hard to make inroads into the State.

Allahabad Bank and United Bank of India are proposed to be merged with Chennai-headquartered Indian Bank and Delhi-headquartered Punjab National Bank, respectively.

Sources reasoned that Delhi-headquartered Punjab & Sind Bank could have been left out of the mega PSB merger as the BJP did not want to disturb its political equation with ally Shiromani Akali Dal and rub the powerful Shiromani Gurudwara Prabhandak Committee, which controls all historical Gurudwaras in the country, the wrong way.

Chennai-headquartered Indian Overseas Bank (IOB) may have been kept out of the mega PSB merger as it is not only weighed down by huge bad loans but also because there could have been adverse reaction from local political parties in Tamil Nadu.

Two large PSBs – Bank of India and Central Bank of India – have not been included in the latest round of consolidation, probably because they are reeling under huge bad loans.

Source - The Hindu Business Line 

Read More

How the mega bank mergers will impact you

With 27 public sector banks, including the second largest PNB, being merged and reduced to 12, almost every other individual who has a savings account or fixed deposit with a public sector bank is likely to be impacted.

The finance minister in the press conference here today said that the 27 public sector banks existing in 2017 will be reduced to 12 after the mergers announced are implemented. Merger of six smaller PSBs with State Bank of India and the merger of Vijaya Bank, Dena Bank with Bank of Baroda has already taken place. Therefore, 10 public sector banks have already been reduced to two larger ones i.e the post-merger SBI and post-merger BoB.

The finance minister, Nirmala Sitharaman in her press briefing said that the creation of next-generation banks was imperative for India to become a $5 trillion economy in the next five years.

Here is how you are likely to be impacted:

1. Get ready to change your cheque books as the various banks get merged. While the existing cheque books may remain valid for sometime, ultimately they will be replaced with the cheque books of the merged entity.

The next-gen PSBs:

Anchor bank 

Punjab National Bank 

Amalgamating bank 

Oriental Bank of Commerce, United Bank of India

Anchor bank

Canara Bank 

Amalgamating bank

Syndicate Bank

Anchor bank

Union Bank of India

Amalgamating bank

Andhra Bank, Corporation Bank

Anchor bank

Indian Bank

Amalgamating bank

Allahabad Bank

2. You would have given your bank account numbers and IFSC codes for various financial transactions -- auto credit of dividends via ECS, auto-credit of salary, auto debit of various bills/charges etc. Unless these accounts are seamlessly merged into the financial system of the new merged bank, you would be required to change the details of your bank given for these purposes. A couple of years, when five associate banks of State Bank of India (SBI) were merged, IFSC codes and names of 1,300 branches were changed. The banking behemoth has changed the names and IFSC codes of branches located in major cities such as Mumbai, New Delhi, Bengaluru, Chennai, Hyderabad, Kolkata and Lucknow. Those who had auto-debits running with these banks like systematic investment plans (SIPs) in mutual funds were impacted. This could be an issue that accountholders of the banks that will be merged now might face.

3. Credit/debit cards issued by the merging banks may have to be exchanged for those of the merged entity although the former are likely to remain valid for the interim period to ensure no disruption in services.

4. Paperwork and keeping financial trail of fixed deposits made will increase a bit as these will be transferred into the merged bank.

5. It is, however, not clear what will happen to the interest rates of those who have loans running with these banks as the MCLR rates are different for different banks.

6. Shareholders of the the publicly listed banks will be impacted. How much the respective shareholders will be impacted will be known once the swap ratios are announced.

6. A plus point is that the branch network would become larger so access to bank branches would become easier provided the merged entity does not shut down all branches of merging banks. The combined entity of Punjab National Bank, Oriental Bank of Commerce, and United Bank of India will become the second largest PSU bank in the country with the second largest bank branch network with 11,437 branches. PNB will be the anchor bank. In the case of the consolidated Indian Bank and Allahabad Bank entity, it will be the seventh largest PSB. Canara and Syndicate Bank will also be merged to become the fourth largest bank. Indian Bank and Allahabad Bank merged. The consolidated Indian Bank and Allahabad Bank will become the seventh largest bank.

7. There is a section of accountholders who will not impacted by these mergers. Sitharaman said that Bank of India, Central Bank of India will continue as is. Indian Overseas Bank, UCO Bank, Bank of Maharashtra and Punjab and Sindh Bank will also continue to operate as is.

Read More

Merger of PSU Banks : 10 PSU Banks to be merged in to four

Finance Minister Nirmala Sitharaman today announced a big consolidation of public sector banks: 10 public sector banks to be merged into four. Under the scheme of amalgamation,

Indian Bank will be merged with Allahabad Bank (anchor bank - Indian Bank); 

PNB, OBC and United Bank to be merged (PNB will be the anchor bank); 

Union Bank of India, Andhra Bank and Corporation Bank to be merged (anchor bank - Union Bank of India); and 

Canara Bank and Syndicate Bank to be merged (anchor bank - Canara Bank). 

Bank of India, Central Bank of India will continue as public sector banks.

In place of 27 public sector banks in 2017, now there will be 12 public sector banks after the latest round of consolidation of PSU banks. The consolidation of public sector banks will give them scale, the finance minister said.

The government also announced capital infusion totalling over ₹55,000 crore into public sector banks: PNB ( ₹16,000 crore), Union Bank of India ( ₹11,700 crore), Bank of Baroda ( ₹7000 crore), Indian Bank ( ₹2500 crore), Indian Overseas Bank ( ₹3800 crore), Central Bank ( ₹3300 crore), UCO Bank ( ₹2100 crore), United Bank ( ₹1,600 crore) and Punjab and Sind Bank ( ₹750 crore).

Last year, the government had approved the merger of Vijaya Bank and Dena Bank with Bank of Baroda (BoB) that become effective from April 1, 2019. In 2017, the State Bank of India absorbed five of its associates and the Bharatiya Mahila Bank.

Finance Minister said We want banks with strong national presence and enhanced risk appetite

Indian Bank to be merged with Allahabad Bank (anchor bank - Indian Bank).

Consolidated Indian Bank and Allahabad Bank to be 7th largest public sector bank with Rs 8.08 lakh crore business (anchor bank - Indian Bank)

OBC and United Bank to be merged in PNB.

Andhra Bank and Corporation Bank to be merged in Union Bank of India.Consolidated Union Bank of India, Andhra Bank and Corporation Bank to be 5th largest public sector banks with ₹14.6 lakh crore business

Canara Bank and Syndicate Bank to be merged.Consolidated Canara Bank and Syndicate Bank to be 4th largest public sector bank with₹15.2 lakh crore business

No retrenchment has taken place post merger of Bank of Baroda, Dena Bank and Vijaya Bank; staff has been redeployed and best practices in each bank have been replicated in others

8 PSU banks have so far launched repo rate-linked loans

Loan tracking mechanism in PSU banks is being improved for the benefit of customers

4 NBFCs have found liquidity support through PSU banks since last Friday

For NBFCs, partial credit guarantee mechanism has already been implemented

Govt working on banking reforms

Gross NPAs of PSU banks have come down

Provision coverage ratio highest in 7 years

Best practices of each bank in consolidation of Vijaya Bank, Bank of Borada and Dena Bank have been absorbed

Non-official directors to perform role analogous to independent directors

Public sector banks enabled to do succession planning

Bank boards given flexibility to fix sitting fee of independent directors

"To make management accountable to board, board committee of nationalised banks to appraise performance of general manager and above including managing director," Sitharaman said.

Read More

Indian Bank opposes merger with OBC, says has well-laid out plan for 3 years

Oriental Bank of Commerce (OBC) may have floated the idea of a merger of two other state-run lenders – Indian Bank and Corporation Bank – into itself, but the Chennai-based bank doesn't seem to be interested. In a statement on Wednesday, Indian Bank said its board doesn't have any such proposal, showing its intent against any such potential merger into OBC should the government ask for its view. “There is no such proposal with the board of the bank,” it said. “The bank has a well-laid out business plan for the next three years, with a clear visibility on growth, earnings and asset quality that create significant value for all its stakeholders.”

Banking sources had told FE that OBC had sought the finance ministry's approval to combine with Indian Bank and Corporation Bank. The ministry would consider OBC's proposal and take a view soon, one of the sources had said.

OBC – which was facing restrictions under the central bank's Prompt Corrective Action (PCA) framework until early February – recorded a net profit of Rs 201.5 crore in the March quarter, compared with a net loss of Rs 1,650.22 crore a year earlier. Even sequentially, the profit surged 39%.

However, Corporation Bank's losses zoomed to Rs 6,581.49 crore during the fourth quarter of FY19, against Rs 1,838.39 crore a year before. Indian Bank saw a net loss of Rs 190 crore in the March quarter, against a net profit of Rs 132 crore in the same period last year.

While the headquarters of OBC is in Gurugram, those of Corporation Bank and Indian Bank are in Mangalore and Chennai, respectively.

Indian Bank's net NPA ratio was the lowest of the three – 3.75%, against OBC's 5.93% and Corporation Bank's 5.71%. At 11.29%, Indian Bank's tier-i capital was higher than OBC's 9.98% and Corporation Bank's 10.52%.

Read More

Big bank theory: This two PSU Banks may merge into Oriental Banks of Commerce (OBC)

With a heavy mandate to push reforms, the BJP-led government may soon kick-start the next phase of consolidation in the public-sector banking space with an amalgamation of three lenders — Oriental Bank of Commerce (OBC), Indian Bank and Corporation Bank.

Banking sources told FE that OBC has sought the finance ministry’s approval to combine with Indian Bank and Corporation Bank. The ministry will consider OBC’s proposal and take a view soon, one of the sources said. However, there is no formal announcement from the finance ministry on the matter yet. Another source said the government may infuse `40,000-50,000 crore into public-sector banks (PSBs) this fiscal, having already provided `1,06,000 crore in FY19.

The merger, if implemented, will be part of the government's efforts to create a few but strong banks with much larger balance sheet to support the rising credit appetite of the fast-growing economy and enable optimum utilisation of resources.

The successful experience of merging State Bank of India with five of its subsidiaries and Bharatiya Mahila Bank, and the amalgamation of Bank of Baroda, Vijaya Bank and Dena bank have given the government confidence that more such consolidation exercises can be handled without any hiccups.

OBC — which was facing restrictions under the central bank's Prompt Corrective Action (PCA) framework until early February —recorded a net profit of Rs 201.5 crore in the March quarter from a net loss of Rs 1,650.22 crore a year earlier. Even sequentially, the profit surged 39%. However, Corporation Bank's losses zoomed to Rs 6,581.49 crore during the fourth quarter of FY19, against Rs 1,838.39 crore a year before.

Indian Bank saw a net loss of Rs 190 crore in the March quarter, against a net profit of Rs 132 crore in the same period last year. While the headquarters of OBC is in Gurugram, those of Corporation Bank and Indian Bank are in Mangalore and Chennai, respectively.

Earlier, there were reports of Punjab National Bank (PNB) amalgamating with OBC and some other smaller banks, such as Punjab & Sind Bank, Allahabad Bank and Andhra Bank. However, given that PNB is still not out of the woods, any such plan may wait until the bank's results for the first quarter of this fiscal are out. PNB recorded losses of Rs 4,750 crore in the March quarter, against a net loss of Rs 13,417 crore in the same quarter last fiscal when the Nirav Modi fraud came to light. It, however, had recorded a net profit of Rs 247 crore in the third quarter of FY19.

Upon amalgamation, the merged entity will have a combined deposits of `6.6 lakh crore and advances of Rs 4.8 lakh crore, said the sources. The net NPA ratio of OBC stood at 5.93%, while that of Corporation Bank and Indian Bank was 5.71% and 3.75%, respectively at the end of March.

Read More

Govt likely to adopt Bank of Baroda-like model of merger for PSBs

The National Democratic Alliance (NDA) government, led by Prime Minister Narendra Modi, in its second stint may not go for a mega merger of public sector banks (PSBs) — a plan which was mooted during recent deliberations on consolidation.

Instead, the government may likely adopt the Bank of Baroda (BoB)-like model to merge two-three banks, people aware of the development said.

Sources said that earlier this month the Reserve Bank of India (RBI) Deputy Governor M K Jain had met Financial Services Secretary Rajiv Kumar and other finance ministry officials in Delhi to discuss the PSB merger plan informally. This was followed by another round of meetings between the officials and the RBI.

The central government has to consult the RBI before formulating a plan for PSB merger, according to the Banking Companies (Acquisition and Transfer of Undertakings) Acts of 1970 and 1980. During the meetings, various combinations for merger of PSBs were discussed, sources said. One of the proposals was to go for a mega merger by way of consolidation of eight to nine banks into two.

“However, the plan was dropped. We can expect at least two sets of mergers this fiscal year on the lines of BoB-like consolidation,” another person said.

Before announcing the three-way merger of BoB, Dena Bank, and Vijaya Bank in September last year, the government had sought the views of the RBI on possible combinations of PSBs “to achieve scale and synergy.” 

“The more the number of banks to be merged, the more difficult the integration process becomes and you lose sight of what happens where. A three-way merger is manageable as consensus building becomes easier,” Ashvin Parekh, managing partner at Ashvin Parekh Advisory, said. He, however, said that the merger has to be well-thought-out and the objectives should be “measurable and evolved.”

The government is working out various combinations for the merger of PSBs and Punjab National Bank (PNB) may be the first candidate which may subsume some other banks. One of the combinations discussed was the merger of Union Bank of India and Bank of India with PNB.

 For the first time, under the Modi government’s tenure, two mergers took place — One, five associate banks and Bharatiya Mahila Bank merged with State Bank of India, and two, Dena Bank, Vijaya Bank merged with BoB.

“India needs fewer, mega banks which are strong, because in every sense, from borrowing rates to optimum utilisation, the economies of scale as far as banking sector are concerned are of great help,” former finance minister Arun Jaitley had said earlier this year.

Source- PSU Bankers

Read More