Bank merger: Union Bank, Andhra Bank, Corporation Bank combine to be India's 5th largest PSB

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Finance Minister, Nirmala Sitharaman August 28 announced a mega consolidation plan for public sector banks. A total of 10 PSU banks will be merged into four entities.

As part of the mega-merger plan, Andhra Bank and Corporation Bank will be merged with Union Bank of India.

In a media briefing, Sitharaman said, the combined entity will be the fifth-largest public sector bank with a combined business size of Rs 14.59 lakh crore. This will be essentially twice the current size of the anchor bank, Union Bank of India.

It will also become the bank with the fourth largest number of branches with 9,609 branches.

All three banks work on the same CBS Platform, Finacle. This will be beneficial in streamlining operations along with enabling quick realisation of gains, she said.

The synergies that arise from the merger of these three banks will allow for the business to grow to twice to four and a half times the size of existing individual banks, Nirmala Sitharaman said. There is potential for cost reduction too due to network overlaps and savings and income opportunities for joint ventures and subsidiaries.

Apart from this, the Finance Minister has also announced the merger of Punjab National Bank (anchor bank) with Oriental Bank of Commerce and United Bank of India, Canara Bank (anchor bank) with Syndicate Bank, and Indian Bank (anchor bank) with Allahabad Bank.