Union Bank board okays merger of Andhra, Corp Bank with itself; clears Rs 17,200-cr capital infusion

Union Bank of India on Monday said its board of directors has approved merger of Andhra Bank and Corporation Bank with itself and given nod for a capital infusion of Rs 17,200 crore in the current financial year.

The decision was taken at the meeting of the board of directors held on Monday, the bank said in a regulatory filing.

The board "considered and given its in-principle approval for the amalgamation of Andhra Bank and Corporation Bank into Union Bank.

"And, (the board also) approved the revised capital plan for 2019-20 to raise capital funds by an amount not exceeding Rs 17,200 crore within which up to Rs 13,000 crore through equity capital and up to Rs 4,200 crore through additional tier I/II bonds," it said.

The bank added that the board has okayed capital raising by issue of equity shares through preferential allotment to the government for an amount up to Rs 13,000 crore, subject to other regulatory approvals.

Finance Minister Nirmala Sitharaman had on August 30 announced a mega merger of pubic sector banks, whereby the number of such banks would now come down to 13 from 19 at present.

In the latest round, as many as 10 banks will be merged into four banks.

Among others, Delhi-headquartered Punjab National Bank will merge Oriental Bank of Commerce and United Bank of India with itself, Canara Bank will merge Syndicate Bank into it while Allahabad Bank will be consolidated with Indian Bank.

Earlier this year, Dena Bank and Vijaya Bank were merged with Bank of Baroda. Prior to this, the government had merged five associate banks of State Bank of India (SBI) and Bharatiya Mahila Bank with the State Bank of India.

Of the other banks in public space, Indian Overseas Bank, UCO Bank, Bank of Maharashtra and Punjab & Sind Bank will continue to function as earlier as they have strong regional focus, Sitharaman had said.

Shares of Union Bank of India on Monday rose 2.27 per cent to close at Rs 56.25 on the BSE.