PNB Ubi Obc Merger

PNB UBI OBC MERGER
Company Profile
PNB
Punjab National Bank (PNB) is a Financial and Banking service bank
owned by Government of India. It’s headquarter is in New Delhi, India.
The bank was established in 1894. As of June2019, the bank has
more than 115 million clients, 7,036 branches and 8,906 ATMs. PNB
has a financial auxiliary in the UK (PNB International Bank, with seven
branches in the UK), just as branches in Hong Kong, Kowloon, Dubai,
and Kabul. It has agent working environment in Almaty (Kazakhstan),
Dubai (United Arab Emirates), Shanghai (China), Oslo (Norway), and
Sydney (Australia). In Bhutan it possesses 51% of Druk PNB Bank,
which has five branches. In Nepal PNB possesses 20% of Everest
Bank Limited, which has 50 branches. At last, PNB claims41.64 % of
JSC (SB) PNB Bank in Kazakhstan, which has four branches
UBI
United Bank of India (UBI) is one of the leading banks in India offering
a host of banking products and services to its customers across the
nation. Founded in December 1950 with the amalgamation of four
small banks in Bengal viz. Hooghly Bank Ltd, Comilla Union Bank Ltd,
Bengal Central Bank Ltd. and Comilla Banking Corporation Ltd, United
Bank of India was nationalized along with 13 other banks on July 19,
1969. It continuously works toward emerging as one of the most
dynamic, tech-savvy, progressive and customer-centric bank in India
with pan-India presence. Currently United Bank of India has more
than`54,536 crores of deposits as well as`35,727 crores of gross
advances. Its head office is located in Kolkata, with 36 Regional
Offices and 2054 Branch Offices.
OBC
Oriental bank of commerce is an Indian public sector bank.
Headquartered at Gurgaon, Haryana has 2390 branches and 2625
ATMs all over India. Rai Bahadur Lala Sohan Lal the main Chairman
of the Bank, established OBC in 1943 in Lahore. Within four years of
its existence, OBC needed to confront Partition. The bank needed to
shut down its branches in the recently shaped Pakistan and move its
enrolled office from Lahore to Amritsar. Lala Karam Chand Thapar,
the then Chairman of the Bank, in an interesting motion regarded the
duties made to the contributors from Pakistan and paid each rupee to
its leaving departing customers. The bank was nationalized on 15
April 1980.
About the Merger Deal
On 30 August 2019, The Finance Minister Nirmala Sitharaman
announced that the Oriental Bank of Commerce and United Bank of
India would be merged with Punjab National Bank. United Bank of
India, Punjab National Bank and State Bank of India will be the
second largest bank in India after State Bank of India. The total
volume of business will be 18Lakh crore. Post-merger, the combined
staff strength of the new entity will be one lakh with 11,400 branches.
United Bank of India reported a net profit of Rs. 113.56 crore for
December quarter in the current fiscal as provisions for bad loans
more than halved. The lender had posted a net loss of Rs 1,139.25
crore in the year-ago period. 34-odd committees and advisory groups
are formed by the three banks for standardization and harmonization
of procedures. Advisor Ernst & Young (E&Y), which has been
appointed by the anchor bank PNB, will regulate the procedure of
harmonization and standardization. It incorporates issues relating
to HR, programming, software, products, administration, and
services. The announcement of amalgamation by Honourable
Finance Minister was made with the following objectives:
Unlocking potential through consolidation - creation of Next Gen
Banks.
Repositioning PSBs with scale for building of USD 5Trillion
Economy.
Big banks with enhanced capacity to increase credit.
Creation of a bank with a strong national presence and international
reach.
 Operational efficiency gains to reduce cost of lending.
Enhanced risk appetite.
Wider offerings with enhanced customization.
 Better ability to raise resources from market.
Deal size: The swap ratio is, 1150 equity shares of PNB will be
exchanged for every 1000 equity shares of OBC, while 121 equity
shares of PNB for every 1000 equity shares of UBI.
DATA ANALYSIS
Earnings per share:
From the above table we can say that the financial performance of the
banks is improving as the Earning per share of PNB has increased
from -54.63 to -29.68. The current net interest margin is2.21 which
means that the Interest margin has also increased when compared to
all the three banks pre-merger. And the amalgamation also led to a
Market Capitalization of 363,089 and an improvement in profit margin
from -50.31 to -38.5. From this data we can interpret that the merger is
having a positive impact on the financial performance of the banks.
Net interest margin ratio:
The net interest margin ratio measures the how successful is the
companies investing its funds in comparison to its expenses on the
investments of the company. The net interest margin of Punjab
national banking, oriental bank of commerce and united bank of India
is decreasing year by year. But the interest margin of three companies
are positive that means banks invest efficiently in all the years.
Market capitalization:
Market capitalization of the companies indicates outstanding shares of
stock. The market capitalization of the Punjab national bank has
decreased to 231,158.50 in 2018 that means the Punjab national that
means they have limited resource and it is riskier for investors to
invest in PNB. The oriental bank of commerce and united bank of
India are not performing well compared to Punjab national bank.
Profit margin:
The profit margin of all three companies is negative in the 2018 means
the Punjab national bank, oriental bank of commerce and united bank
of India cost of production exceeds the total sales which indicates
company’s inability to control costs. In 2017 oriental bank of
commerce is (- 5.93) the company is not performing well when
compared to Punjab national bank and united bank of India.
Financial performance after merger:
The Punjab national bank is not performing well after the merger with
oriental bank of commerce and united bank of India. The earning per
share of the Punjab national bank in 2019 is negative and also their
profit margin is (-38.5) that means after the merger the companies is
not profitable. The net interest margin of the Punjab national bank has
increased to 2.21 compared to2018 which indicates bank is earning
interest on loans compared to the amount it is paying in interest on
deposits after the merger this shows there is a slight growth in the
future.
CONCLUSION
The merger of UBI and OBC into PNB will lead to the creation of the
country's second largest bank after State Bank of India. Both in terms
of business and branch network, the three banks collectively had a
business of Rs. 18 lakh crore at the end of March that originated
through11,437 branches amongst them. As a result of all this the
merged bank will be able to operate more efficiently and serve more
customers with better services.

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