Covid-19 no challenge for Indian Bank-Allahabad Bank merger

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Updated: March 27, 2020 12:35:30 PM

According to the swap ratio, 115 equity shares of Chennai-based Indian Bank are to be exchanged for every 1,000 equity shares of Allahabad Bank. Indian Bank is the anchor bank in this merger process.

They also have a plan to expand total branches for the merged entity to around 10,000 within the same time frame.They also have a plan to expand total branches for the merged entity to around 10,000 within the same time frame.

Indian Bank and Allahabad Bank are not facing any challenge in meeting the April 1 deadline for their merger due to the coronavirus outbreak as the required harmonization of various processes and policies are progressing as per the schedule.

“We are using all electronic facilities, including video conferencing, in talking and harmonizing. There is no need for physical meetings or gatherings. So, there is no change in the schedule due to the coronavirus outbreak,” a top official of Allahabad Bank told FE.

“Before the effective date of the merger, all harmonisation will be completed. Only technology and data integrations will take time,” the official said, requesting anonymity.

Kolkata-based Allahabad Bank, in a stock exchange filing on Tuesday, said its board of directors approved the share exchange ratio for the proposed merger.

According to the swap ratio, 115 equity shares of Chennai-based Indian Bank are to be exchanged for every 1,000 equity shares of Allahabad Bank. Indian Bank is the anchor bank in this merger process.

“All products, interest rates and charges – everything will be harmonized from the day one,” said the official cited above.

The merged entity will be known as Indian Bank. The proposed merger of the lenders will make the merged entity the seventh-largest bank in India. Notably, at the end of the third quarter this fiscal, combined business of the two banks stood at Rs 8.44 lakh crore with a total of 6,062 branches.

Indian Bank’s business stood at Rs 4.5 lakh crore with 2,887 branches as on December 31, 2019, while Allahabad Bank’s total business as on December 31 last year stood at Rs 3.94 lakh crore with 3,175 branches.

“As on date, we have not taken any decision to replace our bank’s ATM-cum-debit cards. Because it will take time. These will be replaced later. Customers of our bank can use their cards till then,” the Allahabad Bank official said.

Significantly, the two banks have chalked out plans to clock around Rs 10 lakh-crore business for the amalgamated entity in the next two-three years. They also have a plan to expand total branches for the merged entity to around 10,000 within the same time frame.

  • First published in The Financial Express edition dated March 19, 2020

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