MERGER AND ACQUISITION IN INDIAN BANKING SECTOR

By-Santosh Kumar Sahoo

Regd.no- 1571091021
 INTRODUCTION
• MERGER
• Combination of two company which are from same or dissimilar sector to form a new
organization in exchange of shares , assets etc.
• ACQUISITION
• In general it means one company buys another company most of the shares in order
to get the ownership by exchange of shares or bonds
• Reason for Acquisition
• It is done to get more market share
• To increase the product line of a product
• To give a tough competition in the market
 TYPES OF MERGER
• CONGLOMERATE MERGER
• It is a merger in which both the company are from different industry. In this sometimes
both are from same sector in order to expand their products in a large market.
• Example: Athelice shoes merges with a soft drink company

• HORIZONTAL MERGER
• A merger in which both the firms are from same Industry.
• Example: coco-cola and Pepsi

• MARKET EXTENSION MERGER

• In this both the company deals with same product they merge and have their business in
two different markets.
• VERTICAL MERGER
• In this two company merge to a final product or services in the market.
 STEPS FOR MERGER AND ACQUISITIONS

• To examine market growth rate

• Selection of target company
• Position of the company in market 
• Proper valuation of company is to be done 
• Discuss all the aspects of market whether it will generate profit or
loss to the company in the upcoming years.
 REASONS FOR MERGER AND ACQUISITIONS 

• Performance of company in sector

• Growth
• Eliminate Competition
• Market Expansion

• SOME OTHER MOTIVES FOR MERGER

• Purchase of assets at a bargaining price
• Increase in technology and skill of employees
• Acquiring new technology
 OBJECTIVE OF THE STUDY

• To know benefits of merger and acquisition

• HR problems
• To know about major merger of psu’s bank
• To know customer point of view

• RESEARCH METHODOLOGY
• Primary data are collected by interviewing customers and some bank staffs
• Secondary data are collected by using internet ,magazines,and text books
The Benefits Of Bank Merger And Acquisitions

• Scale
A merger helps the institution scale up quickly and gain a large group of customers

• Efficiency
Acquisitions also scale the bank more efficiently not just in terms of your efficiency
ratio but also in terms of banking operations

• Business gap filled

Bank Merger and acquisitions empower the business to fill product or technology gap

• Talent and team upgrade

• Financial supports
 LIST OF MERGER PUBLIC SECTOR BANK IN INDIA 2020

• Punjab national bank

PNB bank will take over oriental bank of commerce and united of bank
as an anchor bank.it will become the country second largest bank with
business size of Rs17.94 lakh crore after SBI which has the business of
over Rs52 lakh crore.
• Canara Bank
Canara bank will take over syndicate bank and it will be the fourth largest public
sector bank of the country. After the merger the combined the business will be
Rs15.20lakh crore With lower gross NPA ratio of 8.77%. canara bank will get about rs
6500crore capital from the government.
• Union bank of India
union bank of India will see itself taking over Andhra bank and corporation bank.
post merger it will become 5th largest psb. the combined business base of the
merged bank will be rs14.59lakh crore. Union bank has a net NPA ratio of 6.85%.the
government will provide rs11700 crore to union bank for the merger process
• Indian bank
Indian bank will merged with Allahabad bank and combined business will be rs 8.07
lakh crore. post merger it will became 7th largest PSB.Indian bank had a net NPA
ratio of 3.75% and bank will get rs2500 crore worth capital from govt to complete
the merger
• What have change after the merger of banks on April 1 2020?
• Oriental Bank of Commerce (OBC) and United Bank of India will be
consolidated into Punjab National Bank (PNB). After the merger, these two
lenders will form the second-largest public sector bank in the country, after
State Bank of India (SBI).
• Syndicate Bank will now be a part of Canara Bank, which will make it the
fourth-largest public sector lender.
• Indian Bank will be amalgamated with Allahabad Bank.
• Union Bank of India will be merged with Andhra Bank and Corporation Bank
• Customers, including depositors of merging lenders will be treated as
customers of the banks in which these banks have been amalgamated with
effect from 1 April 2020.
 HR ISSUES IN MERGERS & ACQUISITIONS

• Before the new organization is formed, goals are established, efficiencies

projected and opportunities appraised as staff, technology, products, services and
know-how are combined.
• But what happens to the employees of the two companies? How will they adjust to
the new corporate environment? Will some choose to leave?
• When a merger is announced, company employees become concerned about job
security and rumors start flying creating an atmosphere of confusion, and
uncertainty about change.
• HR plays an important role in anticipating and reducing the impact of these
cultural clashes.
• Ego problem
• Lack of communication between them
 RISK WHEN BANK MERGED

• When two banks merge into one then there is an inevitable increase
in the size of the organization. Big size may not always be better.
• Consolidation does not lead to instant results and there is period
before the results arrive
• There is a problem of valuation associated with all mergers. The
shareholder of existing entities has to be given new shares.
• Further, there is also a problem of brand projection. This becomes
more complicated when existing brands themselves have a good
appeal.
 CHALLENGES FACED IN A WAY OF MERGER

•  Managing Cultural Differences

•  Managing Manpower and
•  Branch Rationalization
•  Technological Integration
•  Making Geographically Compatible Banks
QUESTIONS FROM CUSTOMER POINT OF VIEW WHEN A
BANK IS MERGED

• Whether the account number, customer id’s , likely to be changes or

not?
• Resubmission of account details for auto debits or debits
• Where are the local branches and its atm’s
• The fixed deposit interest rate will be change or not
• Also the lending rates
• The working hours of banks etc.
 CONCLUSION

• Main motive behind merger or acquisition are

• To improve revenues and profit
• To give a tough competition to its competitor in the same
sector as well as market
• Employees play an important role in the success or failure
behind a merger and acquisition of any bank.