Keeping in mind the 1 April 2020 deadline, the boards of 10 public sector unit banks (PSU banks) announced share-swap ratios to put into effect the proposed mega merger of state-run lenders announced by the central government last year.
The Nifty PSU Bank Index took a sharp hit on Friday, falling nearly 9% at the day’s lowest point, as broader markets plunged too, after the Yes Bank debacle multiplied the fears of the impact of Coronavirus fears on Indian economy.
The merger will create four large public sector banks compared with 10 earlier. Here’s how stocks of these PSU banks reacted after the swap ratios were announced:
PNB – United Bank of India – Oriental Bank of Commerce
Punjab National Bank (PNB) will merge with United Bank of India and Oriental Bank of Commerce (OBC) to create the largest bank in the country after State Bank of India (SBI). PNB will issue 121 shares for 1,000 shares of United Bank of India and 1,150 shares for 1,000 shares of OBC.
PNB shares fell nearly 6% in afternoon trade on Friday, while those of United Bank of India plunged 20%. Meanwhile, OBC shares were trading in the green, up nearly 3%.
Union Bank of India – Andhra Bank – Corporation Bank
Andhra Bank and Corporation Bank will merge into Union Bank of India. Union Bank of India said it will issue 325 shares for 1,000 shares of Andhra Bank, and 330 shares for 1,000 shares of Corporation Bank.
Union Bank of India shares slumped 7% in afternoon trade, while those of Andhra Bank were down over 8%. But Corporation Bank shares nosedived by a sharper 20%.
Canara Bank – Syndicate Bank
Syndicated Bank will be amalgamated into Canara Bank. Canara Bank announced it would issue 158 shares for every 1,000 shares of Syndicate Bank. Consequently, Canara Bank shares dropped 6% in afternoon trade, while those of Syndicate Bank Ltd were down nearly 3%.
Allahabad Bank – Indian Bank
Allahabad Bank is supposed to be merged into Indian Bank. Indian Bank will issue 115 shares for every 1,000 shares of Allahabad Bank.
Indian Bank shares fell 3% in afternoon trade, while those of Allahabad Bank plunged over 17%.