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9 PSU banks consider merger
R Prema in New Delhi |
November 30, 2004 15:20 IST
Don't be surprised if your bank vanishes overnight to re-emerge with a new name.
The finance ministry thus wants the country's nationalised banks to develop better brand equity, and become stronger and smarter.
The ministry believes that the merger of existing nationalised banks that will create a stronger identity can help win the confidence of depositors more than any of the mushrooming private banks.
Already there is talk of a possible merger of the Bank of India and the Union Bank of India. If it goes through it will create the second largest bank in India after the State Bank of India.
However, to merge the banks need the approval of their respective boards of directors and the final nod from the Reserve Bank of India.
The finance ministry has already forwarded the merger plan to the RBI for its approval.
As both are leading banks, discussions are focused on what name the new 'merged identity' should have. The Bank of India is insisting on retaining its brand name on the ground that it is bigger in terms of assets, net worth and profits. The Union Bank of India, meanwhile, points out that it has higher market capitalization -- Rs 4,279 crore (Rs 42.79 billion) as against BoI's Rs 3,438 crore (Rs 34.38 billion).
Reportedly, Andhra Bank, Indian Bank and Vijaya Bank constitute the other lot of the nationalised banks that have informed the government about their intent to merge and form the leading bank in the southern states.
Together, they will have a spread of 3,400 branches across the country, majority of them in the southern region.
Canara Bank and United Commercial Bank too are learnt to have sent proposals to the finance ministry for their merger, while Indian Overseas Bank with Punjab National Bank too are considering the possibility of a merger.