Canara Bank will take over Syndicate Bank as part of the Narendra Modigovernment's plan to merge 10 public sector banks into four. This will make it the fourth largest public sector bank. Mrutyunjay Mohapatra, Syndicate Bank Managing Director and Chief Executive Officer speaking on the merger will create the fourth largest public sector bank (PSB) with a business size of Rs 15 trillion. It’s a good move as it will create large banks of global scale which is sought after in any country. Our cultures are similar to Canara Bank’s and we both the banks are from Bangaluru.

Indian banking looking at better days ahead said, RA Sankara Narayanan, MD & CEO, Canara Bank and the major advantage of consolidation is the size. A $5 trillion economy requires bigger banks and this move will definitely give strength. The government also has announced capital infusion to all the banks including us. So, compared with the industry we will be somewhere around 13% CRAR and combined CASA is better and combined net NPA is also lower than 6%. We are very confident this will add value not only for regulatory compliances but also for growth. 

The board of directors are now to review the performance of the general manager and above including managing director. This will lead to definite value and succession planning as well as better risk management followed by more positive governance. I think Indian banking is looking for better days ahead. 

Canara Bank take over Syndicate Bank as part of the Narendra Modi government’s plan to merge 10 public sector banks into four. This will make it the fourth largest public sector bank. The government will infuse capital worth Rs 6,500 crore into Canara Bank.

The merger of Canara Bank with Syndicate Bank could come up with some challenges. Canara has a joint venture in life insurance with HSBC and Oriental Bank of Commerce . While Syndicate Bank sells products of Bajaj Allianz, the branches of merged entity would also sell Canara HSBC joint venture products. These teething issues will be short out sooner.

Explaining the rationale behind these mergers, Nirmala Sitharaman said, these decisions were taken with the objective of making them "global-sized banks". Nirmala Sitharaman said the merger will also help in consolidating strong national presence and global reach of these banks.

Union Finance Minister Nirmala Sitharaman also said that the profitability of public sector banks has improved and the total gross non-performing assets (NPA) have come down to Rs 7.9 lakh crore at end-March 2019 from Rs 8.65 lakh crore at end-December 2018. She further said, to avoid Nirav Modi like frauds in the PSBs, the SWIFT messaging system has now been linked with the core banking system.

The Equations will be like:

There will be only 12 public sector banks that India will have after today's decision are: State Bank of India, Punjab National Bank, Bank of Baroda, Bank of India, Central Bank of India, Canara Bank, Union Bank of India, Indian Overseas Bank, Punjab and Sind Bank, Indian Bank, UCO Bank and Bank of Maharashtra.

1.    The Oriental Bank of Commerce (OBC) and the United Bank of India (UBI) have been merged into the Punjab National Bank (PNB). The PNB will now be the second largest PSU bank after the State Bank of India, which earlier saw a similar consolidation with all its associates merging with it will create a bank with a business of Rs 17.95 lakh crore and have 11,437 branches.

2.    The Syndicate Bank has been merged with the Canara Bank the resultant bank will become India's fourth largest public sector bank with Rs 15.20 lakh crore business.

3.    While the Andhra Bank and Corporation Bank will be merged with the Union Bank of India to become India's fifth largest public sector bank with Rs 14.59 lakh crore business.

4.    The Allahabad Bank will merge into the Indian Bank. This will make it the seventh largest state-owned bank in India. with 4,56 lakh Crore