National: Four Banks to merge again

     Written by : SMTV24x7 | Mon, Jun 04, 2018, 04:30 PM

National: Four Banks to merge again

New Delhi, June 04: The Central government is considering merging at least four state-run banks, including Bank of Baroda, IDBI Bank Ltd, Oriental Bank of Commerce and Central Bank of India, two people aware of the matter said.

If the plan goes through, the merged entity will become the second-largest bank in the country after State Bank of India, with combined assets of Rs.16.58 trillion.

With the merger, the government hopes to help stem the rise in bad loans in their books at a time when poor asset quality has crippled the lending ability of some of them. The merger will also allow the weak banks to sell assets, reduce overheads and shut money-losing branches.

The four banks that are being proposed to be merged are under pressure with combined losses of Rs.21,646.38 crore in the year ended 31 March.

The department of financial services, under the finance ministry, is also simultaneously considering a 51% stake sale in IDBI Bank to a strategic partner, for Rs. 9,000-10,000 crore, the people said on condition of anonymity.

Government officials declined to comment, saying the matter is highly market sensitive. In his 2016 budget speech, finance minister Arun Jaitley said that the government was considering reducing its stake in IDBI Bank to less than 50%.

The government had merged SBI with five of its associate banks and Bharatiya Mahila Bank in April 2017.