Bank of Punjab to surrender banking licence

Bank of Punjab is likely to surrender its banking licence to the Reserve Bank of India (RBI) following its merger with Centurion Bank.

"Both the banks are listed entities and hence one will have to give up its identity," said a banking source. The merged entity would have a different legal name. However, the brand name is likely to be 'Centurion Bank', said the source.

Both the brands are strong in their respective geographies and businesses and hence the merged entity will have the elements of both, he added. Centurion Bank has a presence in south and west while Bank of Punjab has a strong presence in north.

"There will be no employee retrenchment following the merger," said the banking source. The staff strength of the merged entity will be around 3,400.

There will be some board level restructuring, said the source. The new board would have two representatives from Bank of Punjab however that depends on the swap ratio, said the banking source.

"Market players expect the swap ratio to be 2:1," said market sources. For every two stocks of Centurion Bank a shareholder will get one stock of Bank of Punjab.

Rana Talwar will be the chairman of the merged entity and Shailendra Bhandari will be the managing director and chief executive officer of the merged entity. The bank boards will meet on June 29 to decide on the final terms of the merger.

Ambit Corporate Finance has been appointed as the sole investment banker. KPMG and N M Raiji have been appointed as the independent valuers to decide on the share swap ratio.

On the Bombay Stock Exchange today the Centurion Bank scrip ended the day down 1.13 per cent at Rs 14.90. The Bank of Punjab stock ended the day gaining 7.37 per cent at Rs 33.50.