Canara Bank’s board of directors, on Friday, gave the in-principle approval for amalgamation of the bank with Syndicate Bank.

The in-principle approval for amalgamation of the two public sector banks (PSBs) is as advised by the Alternative Mechanism of Government of India (GoI) to commence the process of amalgamation, subject to applicable approvals, the bank said in a stock exchange notice.

The amalgamation of Bengaluru-headquartered Canara Bank and Manipal-headquartered Syndicate Bank will create India’s fourth-largest PSB with business (deposits and advances) of ₹15.20-lakh crore and the third-largest branch network (10,342 branches).

Individually, Canara Bank and Syndicate Bank have total business of ₹10,43,249 crore and ₹4,77,046 crore, respectively. The combined entity will have 89,885 employees – Canara Bank (58,350) and Syndicate Bank (31,535). According to the finance ministry, this merger will see scale and synergy benefits through large cost reduction potential due to network overlaps and cost savings, and income opportunities for joint ventures and subsidiaries. The same core banking solution (CBS) platform, iFlex, in both banks will enable quick realisation of gains.

The ministry expects smooth consolidation due to similar culture. Canara Bank’s board also considered and approved capital infusion of up to ₹9,000 crore by GoI via preferential allotment of equity shares at a price determined in terms of SEBI (ICDR) Regulations, subject to necessary regulatory approvals.

As of June-end 2019, the government had a 70.62 per cent stake in Canara Bank and 78.48 per cent stake in Syndicate Bank.

The PSB said convening an Extraordinary General Meeting/Postal Ballot notice for obtaining shareholders’ approval for capital infusion by GoI will be intimated separately in due course.

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