05-04-2012, 04:54 PM
MERGER OF BANK OF PUNJAB AND CENTURION BANK
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BANK OF PUNJAB
The Bank of Punjab made its debut in 1989 following The Bank of Punjab Act 1989. It became a scheduled bank from 1994. Since then it is in operation as a scheduled commercial banks having a network of 271 branches in the all the important trading centres of India.
The main pillar of the Bank of Punjab is its focus on agriculture – this being the backbone of the country’s economy. It has introduced the Kissan Dost Agriculture Finance Scheme to small farmers.
CENTURION BANK
Centurion Bank, a joint venture between 20th Century Finance Corporation and Keppel Group of Singapore through Kephinance Investment, was established on June 30, 1994. Initially it started with a network of ten branches. In the following year, Centurion Bank amalgamated 20th Century Finance Corporation. Then came June 29, 2005 when the Centurion Bank and the Bank of Punjab merged together to form Centurion Bank of Punjab.
MERGER
Centurion Bank Merger created the Centurion Bank of Punjab bringing together two separate banks, named Centurion Bank and Bank of Punjab. This merger increased market share for the merged bank, raised its' book value and gave it a rank among the top ten private banks of India.
OBJECTIVE OF MERGER
• This merger took place to helped both the banks to gain in terms of market share and customer base.
• To undertake an `integration audit' of its operations
• The merger was for growth .Both banks want to exploit the strength of each other. While BoP has strong presence in North India, Centurion has widespread network in the Western region.
PURPOSE OF MERGER
The proposed merger of Bank of Punjab and Centurion Bank is sure to encourage other private sector banks to go for the M&A road for consolidation.
Due to intensifying competition, access to low-cost deposits is critical for growth. Therefore, size and geographical reach becomes the key for smaller banks. The choice before smaller private banks is to merge and form bigger and viable entities or merge into a big private sector bank
TYPE OF MERGER
The type of merger was horizontal merger.
REASON FOR MERGER
Private Banks are taking to the consolidation route in a big way. RBI has approved merger of Centurion Bank and Bank of Punjab effective from October 1, 2005. The merger is at a swap ratio 9:4 and the combined bank is will be called Centurion Bank of Punjab.
SWAP RATIO FOR BANK OF PUNJAB, CENTURION BANK MERGER
The Board of Directors of Centurion Bank and Bank of Punjab approved a swap ratio of 4:9 for the merger of the two banks into a new entity to be called Centurion Bank of Punjab.
As per the plan, for every four shares of Bank of Punjab its shareholders will get nine shares of Centurion Bank.