Project Report

Submitted for the Degree of B.Com (Hons.) in Accounting & Finance

Specialisation at Mahadevananda Mahavidyalaya under West Bengal
State University

Title of the Project

Merger and Acquisition of Syndicate Bank & Canara Bank
June, 2022

Submitted by
Bikash Shaw
Registration No. : 1231911400247
Roll No. : 872

Supervised by
Amit Chakraborty
Professor, Dept. of Commerce

Mahadevananda Mahavidyalaya

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 Annexure -1
Supervisor’s Certificate

This is to certify that Mr. Bikash Shaw a student of B.Com (Hons.) in

Accounting & Finance Specialisation of Mahadevananda
Mahavidyalayaunder the West Bengal State University, Barasat, has
worked under my supervision and guidance for his Project Work and
prepared a Project Report with the title “Merger and Acquisition in
Banking Sector”
His work is genuine and original to the best of my knowledge.

Signature:

Place :Monirampur , Kol-700120

Name: Mr. Amit Chakraborty
Date : 31/5/2022
Designation: Professor

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 Annexure -2
Student’s Declaration

I hereby declare that the Project Work “Merger and Acquisition in

Banking Sector” submitted by me for the partial fulfilment of the
degree of B.Com (Hons.) in Accounting & Finance Specialisation of
Mahadevananda Mahavidyalaya under the West Bengal State.
University, Barasat, is my original work and has not been submitted
earlier to any other University / Institution for the fulfillment of the
requirement for any course of study. I also declare that no chapter of this
manuscript in whole or part has been incorporated in this report from
any earlier work done by others or by me. However, extracts of any
literature which has been used for this report are duly acknowledged
providing details of such literature in references.

_______________
Signature
Name: Bikash Shaw
Address: A.P.Devi Road, Titagarh,
24 PGS(N) Kolkata-700119

Place: Titagarh Registration No.1231911400247

Date:31,5,2022 Roll No. 872

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 Acknowledgement
I would thank God for being able to complete this project with success.
Then would like to thank my supervisor Mr. Amit Chakraborty and our
all Faculty Members whose valuable guidance has been the ones that
helped me patch this project on the topic MERGER AND
ACQUISITION IN BANKING SECTOR. It helped me in doing a lot of
Research and I came to make it full proof success his suggestions and his
instructions has served as the major contributor towards the completion
of the project.

Then I would like to thank my parents and friends who have helped me
with their valuable suggestions and guidance has been helpful in various
phases of the completion of the project.

Last but not the least I would like to thank my classmates who have
helped me a lot.

Signature.

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 INDEX

Serial Page
Number
Particulars Number

1. INTRODUCTION 6-7

2. REVIEW OF LITERATURE 8-9

3. CONCEPTUAL FRAMEWORK 10-11

4.
RESEARCH METHODOLOGY 12

5.
DATA ANALYSIS 13 - 14

CONCLUSION AND SUGGESTIONS

6. 15 - 16
FOR FUTURE STUDY

7. REFERENCES 17

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 CHAPTER – 1

INTRODUCTION

Merger can be defined as a method of unification of two players into single

entity. Merger is also a way of mixing two business entities below the
common possession. Bank merger is a happening once previously distinct
banks are consolidated into one institution. A merger happens once an
independent bank loses its charter and becomes a neighbourhood of an
existing bank with one headquarter and a unified branch network. The word
acquisition, conjointly called a takeover or a acquisition, is that the
shopping for of one company (the ‘target’) by another. A sale is also
friendly or hostile. The method of mergers and acquisitions was importance
in today’s world. In India, the idea of mergers and acquisitions was first
initiated by the govt bodies and few accepted financial firms, organizations
conjointly took the specified initiatives to restructure the company sector of
India by process of the mergers and acquisitions policies. The industry
could be a vital space throughout that merger and acquisitions do build
immense monetary gains. As a result of changes within the expectation of
the company customer, banks are currently forced to rethink their business
and devise new ways.
Merger: A particular activity is called a merger when corporations come
together to combine and share their resources to achieve common

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objectives. In a merger, both firms combine to form a third entity and the
owners of the combining firms remain as joint owners of the new entity.

Acquisition: An acquisition is an activity where a firm takes a controlling

ownership interest in another firm, a legal subsidiary of another firm or
selected assets of another firm. This may involve the purchase of another
firm’s assets or stock. Acquiring all the assets rather than acquiring stocks
or shares of the selling firm will avoid the potential problem of being the
minority shareholder.
IMPORTANCE OF THE STUDY
Several researches have been conducted on analysis of financial
performance of banking sector as well as case studies on Canara Bank.
However, analysis of financial performance of Canara Bank right before
Syndicate Bank was merged into it and the impact of merger on Canara
Bank has not been done. The researcher aims to fill this gap by analysing
the financial performance of Canara Bank from 2015-2020 and sheds light
on if the merger between Canara Bank and Syndicate Bank will be
beneficial or not.
OBJECTIVES OF THE STUDY
1. To analyse the financial performance of Canara Bank and Syndicate
Bank.
2. To explore the reasons behind this merger of two entities.
3. To discuss whether the merger is beneficial for both of the banks.

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 CHAPTER - 2

REVIEW OF LITERATURE
Lyngdoh, (2017) examined the top private sector banks in India by
comparing the financial performance of HDFC and ICICI bank. His finding
shows that HDFC bank’s performance and financial soundness is better than
ICICI bank. However this study was conducted during the period of
2012/13 to 2016/17.

Bishnoi & Devi (2015) studied the performance of Banks after merger in
Indian context. They analysed profitability, solvency, efficiency and growth
rates of Indian banks. They concluded that the performance of Merger
Company significantly improved after mergers.

Rajamini & Ramakrishna, (2015) find out that after merger financial
ratios such as; GPM, NPM, ROCE, ROE and DER has all indicate raising
trend while OPM indicates an inconsistent result. In a similar research
Devarajappa, 2012, noted the same findings.

Bhatnagar, R. G. (2001) study explored a heavy toll on the public sector

banks plagued by NPA tainted balance sheets and burdened with the flab of
endless bureaucratic interventions of the past. In the increasingly
competitive industry, well managed, highly popular and innovative sectors
banks are giving the PSBs a run for their money. The author offers a
solution through merger and streamlined operations.

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Sunita Chaki, Kshamata Chauhan and Anita Daryal (2019)state that
bank’s soundness is very essential for economy as it is very significant
necessity for a stable economy .It has been found that the banking sectors
has been vulnerable to internal as well as external instabilities. It has also
been comprehended that the banks have faced hurdles trying to maintain its
asset quality along with its profitability.

In the article “A Study on Financial Performance of Canara Bank” written

by B. Kishori and SijaMol (2018), writers have tried to analyse Canara
Bank’s financial performance in the last five years with the help of profit
and loss account, financial statements and the balance sheet of the bank. The
writers have used ration analysis to analyse the performance of bank units as
it is the interpretation of financial statements and has used trend analysis to
evaluate bank’s income and sales percentage. The financial Statement
shows the way in which a business has flourished under the supervision of a
management personnel. By analysing the profitability ratio, the liquidity
ratio, the turnover ratio and some other factors, writers have concluded that
the overall financial performance/ position of the Canara Bank is
satisfactory.

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 CHAPTER –3

CONCEPTUAL FRAMEWORK
The Procedure Of A Bank Merger:

Bank consolidated procedures are provided under the Banking Regulation

Act,1949.Two or more banks can to merge their businesses in consultation
with the regulating authority.The proposal must be placed in Parliament for
approval. Parliament has the right to modify, accept or reject the Merger
scheme

The Advantages of Merger

 It reduces the cost of operation.

 It helps to improve the professional standard.
Provides the better efficiency ratio for operations as well as banking
operations which is beneficial for the economy
 Multiple posts get abolished, resulting in substantial financial savings
firms mergers improve risk management.
 The merger helps the geographically concentrated regionally present
banks to expand their coverage.
 NPA is beneficial.
 Reduced financial risk.
 Increased opportunities.

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  Small fee.
 Availability of cheap loans.

Disadvantage of Merging Banks

 Acquiring banks have to bear the burden of weaker banks.

 Very challenging to manage the people and culture of different banks.
 Also destroy the idea of decentralization as many banks have a
regional audience to cater Large banks are more vulnerable to global
economic crises.
 Mergers may make it difficult for private banks to gain faster market
share as most anchor banks are large.

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 CHAPTER - 4
RESEARCH METHODOLOGY

 Period of the study: 2020-2021 have been considered

as the period of analyse the merger of Syndicate Bank
with Canara Bank
 Data Sources: The relevant collected from different
secondary sources. To assess the performance, relevant
information were collected from the website of the
banks.
 Sample of the study: To analyse the data, to banks in
Indian industry have been selected. Canara Bank and
Syndicate bank have been selected as the sample of the
study.
 Statistical tools: Statistical tools like ratio analysis,
descriptive statistics were used to derive the inferences
of the study.

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 CHAPTER-5
DATA ANALYSIS
March 31, 2020 April 1, 2020

Particulars Canara Syndicate Amalgamated

Bank Bank company

Total Diposits 6,25,351 2,81,270 9,05,523

Total Gross Advances 4,51,223 1,99,995 6,51,218

Total Businesses 10,76,574 4,81,265 15,56,741

CASA Ratio- 32.59 35.09 33.36

Domestic(%)

No Of Branches 6,329 4,062 10,391

(Domestic)

No Of ATMs 8,850 4,573 13,423

Total Staff 57,918 32,084 90,002

Source: Reports of the Canara bank

On April 1st 2020, Syndicate Bank was amalgamated into Canara Bank and
the project has been called “Project Synergy”. Just like Canara Bank,
Syndicate Bank was also found in a small town of Karnataka, the vision of
the founder T. M. A. Pai was to boost his region’s social & economic status.
Before the merger, almost thirty committees were studying different aspects

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of consolidation, even regarding Human Resources and Technology for
better harmonization. Both the banks had appointed financial as well as
legal advisors to perform thorough research on swap ratios & valuation.

This amalgamation will combine the vision, legacy, culture, ideology of

Syndicate & Canara Bank to provide the best service to the society. It is
anticipated that economies of scale & reach will lead to increased
profitability and employing advanced technology would act as a tool for
achieving rapid growth. Furthermore,the merger will help in boosting up the
growth of credit, implementing better cost-efficient entities and in
enhancing risk management strategies

From this merger Canara Bank will have a wider geographical reach along
with increase in size, services & strength. As a merged bank, the total
number of branches will be 10,403 & the ATMs will be 13,406. Customers
of Syndicate bank will be treated as customers of Canara Bank, the services
& products of both the banks will be made available to all the customers
with the help of broader network.

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 CHAPTER - 6

CONCLUSION AND SUGGESTIONS FOR FUTURE

STUDY
Limitations of the Study

i. This study covers only a single year’s data for analyzing the financial
performance of amalgamated company.
ii. In recent merger and amalgamation cases only a single entity’s have
been noticed, therefore for analyze the impact of merger and
acquisitions on amalgamated entity, only one merger cases have been
took.
iii. There are various aspects to analyze the performance; however this
study considers only financial performance of the entity.

SUGGESTIONS:-

i. To increase their profitability, Canara Bank should provide attractive

interest on deposits, so as to attract more customers.
ii. Net NPA of Canara Bank has decreased in the study period, but when
compared to the other Public Sector Banks, it still needs to work on
reducing its NPA.
iii. Bad loans can be avoided by evaluating the asset value of borrower’s
asset quality, which is provided as collateral security, so that they can
cover the loan amount if the borrower defaults.

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iv. There is a need to evolve an effective and strict mechanism for loan
recovery.
v. Technological up gradation is required to keep up with the
advancement of technology, which will make bank more easily
accessible to the customers.

CONCLUSION:-

Analysing financial performance of a bank helps in understanding the

strength and weakness of that bank. Studying its performance over the years
gives an idea of the personal growth of the bank, however the comparative
study gives a clear picture of its position and growth as compared to the
other banks. Canara Bank has an efficient risk management strategy, as a
strong CAR depicts that it has sufficient capital to meet unexpected risks/
losses. However, profitability of Canara Bank has been quite concerning, as
it is fluctuating in significant amount over the years. Low profitability will
affect in accumulating capital in the near future and it will hinder lending
loans and advances to big firms and companies who are in need of funding.
It is anticipated that the merger of Syndicate Bank with Canara Bank will
provide a wider scope & contribute in building a stronger economy. It is yet
to be seen if the merger will prove to be a profitable one or not.

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REFERENCES

 Lyngdoh, (2017) examined the top private sector banks in India by

comparing the financial performance of HDFC and ICICI bank .
 Bishnoi& Devi (2015) studied the performance of Banks after merger
in Indian context.
 Rajamini& Ramakrishna, (2015) find out that after merger financial
ratios such as; GPM, NPM, ROCE, ROE and DER .
 Nagarkar, J., (2015) “Analysis of Financial Performance of Banks in
India”, Annual Research Journal of Symbiosis Centre for Management
Studies, Vol. 3, pp. 26-37
 Vyas, A., Agarwal, N, (2018), “Financial Inclusion in India: A Case
Study of Canara Bank”, JETIR, Vol. 5, No. 6, pp. 562-570
 Kishori, B., Mol, S. (2018) “A Study on Financial Performance of
Canara Bank”, IJARIIE, Vol. 4, No. 3, pp. 1831-1835
 Muthukumar, E., Shankarii, S. (2017), “A Study on Financial
Performance of Canara Bank with Special Reference to Coimbatore
City”, Shanlax International Journal of Commerce, Vol. 5, No. 1, pp.
31- 38
 Deolalkar, G.H., (2000), “The Indian Banking Sector on the Road to
Progress”, Asia Regional Integration Centre, pp. 1-52

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