What Will Happen to the Stocks of Andhra Bank and Corporation Bank When They Are Merged with Union Bank?

The proposed merger of Andhra Bank and Corporation Bank with Union Bank is set to transform the Indian banking sector. As of now, the timeline suggests that by February, independent evaluators will be hired by the boards of these three banks to value their respective companies. Post-evaluation, the boards will collaborate to agree on a stock swap ratio. Subsequently, on a specified date, the trading of Andhra Bank and Corporation Bank stocks will be halted, and their shares will be converted into Union Bank stocks according to the agreed ratio. This process can be better understood by delving deeper into historical and current scenarios.

Historical Perspective: Share-Swap Ratio for Union Bank

To provide context, when Bank of Baroda took over Dena Bank and Vijaya Bank, the share-swap ratios were quite significant. Specifically, 1000 Dena Bank shares equated to 110 Bank of Baroda shares, while 1000 Vijaya Bank shares corresponded to 402 Bank of Baroda shares. These ratios illustrate the complexity and thoroughness involved in valuing and swapping bank shares.

Current Merger and Swap Ratio

Recently, the public sector banks announced the share-swap ratios for the upcoming merger. As of the latest update, the swap ratio for Andhra Bank shares in Union Bank of India (UBoI) is set at 0.33. This means that for every 1000 Andhra Bank shares, one will receive 330 Union Bank shares. Similarly, for every 1000 Corporation Bank shares, one will receive 330 Union Bank shares.

The independent evaluators play a crucial role in ensuring that the ratio of the stock swap is fair. Their expertise guarantees that the process is transparent and just. Investors should also be aware that they have the option to sell their current shares before the swap date if they do not agree with the announced ratios.

What to Expect During the Merger Process

During the merger process, the following steps are expected to be followed:

Hiring independent evaluators: Boards of Andhra Bank, Corporation Bank, and Union Bank will appoint independent evaluators to assess the value of each bank. Agreement on stock swap ratio: The evaluators' findings will be reviewed by the boards, who will then agree on the stock swap ratio based on the valuation. Stops in trading: On a specified date in the future, the trading of Andhra Bank and Corporation Bank stocks will be halted on exchanges. Conversion: On the same day or the following day, existing shares of Andhra Bank and Corporation Bank will be replaced with Union Bank shares according to the agreed stock swap ratio.

FAQs

Q: Can I sell my shares before the swap date?

A: Yes, if you do not agree with the announced share-swap ratio, you can sell your shares before the swap date to avoid any changes.

Q: What will happen to my Andhra Bank and Corporation Bank stocks?

A: They will be swapped for Union Bank shares based on the specified ratio. It's important to keep track of the latest announcements and ratios to plan your investment strategy accordingly.

Q: How can I stay informed about the latest developments?

A: Regularly check the official websites of the banks involved in the merger, as well as financial news and regulatory bodies for the most up-to-date information.

For further insight and to keep abreast of the latest developments, it's essential to follow the official announcements and stay updated with industry experts. The process, while complex, is built to ensure fairness and transparency in the merger of these public sector banks.