BoR-ICICI merger among handful of consolidation moves in India
The Bank of Rajasthan-ICICI Bank merger ends the one-and-a-half-year lull in M&A activities in the banking space, while globally a wave of consolidation has been sweeping the industry since the 2008 financial meltdown.
Unlike the advanced economies like the US and the UK, banking sector in emerging markets like India has not seen many big ticket M&A transactions in recent years.
Troubled Bank of Rajasthan has said that it would merge with country's largest private sector lender ICICI Bank and based on today's share price, the deal would be worth about Rs 1,500 crore.
Meanwhile, one of the the largest domestic deals happened in early 2008, when the merger of HDFC Bank and Centurion Bank of Punjab was approved by boards of both entities.
The country's largest public sector lender State Bank of India (SBI) is looking to takeover all its six associate banks in due course.
In 2008, SBI merged State Bank of Saurashtra with itself. The entity has also got the approval to merge State Bank of Indore with itself.
The domestic banking industry has also seen other mergers, most of which were a last ditch attempt to rescue an ailing entity. Such deals include the merger of New Bank of India and Nedungadi Bank with public sector major Punjab National Bank.
Another one was the merger of then sinking Global Trust Bank in 2004 with Oriental Bank of Commerce.
However, the consolidation of the banking industry is still continuing strongly in the US, one of the worst hit by the financial crisis in 2008.
In nearly two years, the world's largest economy has seen many multi-billion dollar mergers and acquisitions, with majority of them happening weeks after the demise of investment banking major Lehman Brothers in September 2008.
Among the major acquisitions in the US banking sector in the last two years are Bank of America's multi-billion buyout of Merrill Lynch and Wells Fargo's acquisition of Wachovia in a $15 billion transaction.
Apart from the US, many other developed markets, including the UK have seen quite a few bank mergers and acquisitions in the last two years.