You are on page 1of 1

CAN THE ELEPHANTS DANCE?

The government has put consolidation of public sector banks backon


the table, and if the grapevine is to be believed, one of the criteria
would be to identifybanks that complement each other on
geographical reach. For example, Dena Bank, which has a strong
presence in the western region, could be a candidate to merge with
Punjab National Bank, which is strong in the north. If such a merger happens, the total
number of branches of the merged entitywill be double those of ICICI Bankor HDFC Bank.
Similarly, if IDBI Bankand United Bankof India (UBI), which has a strong presence in the
east, are merged, the number of branches of the merged entitywill almost equal the
number of branches the top two private banks have individually. IDBI Bankand UBI,
though, have informed the exchanges no such proposal was discussed bytheir boards or
anycommunication received from the government on the issue. However, the point to
note is the market capitalisation of such merged entities will be far belowthose of HDFC
Bankor ICICI Bank, reflecting the relative market value of private and public sector banks.
186,732.09
14,467.54
IDBI 3,675.97
8410.79
18,336.52
BoI
26,747.31
170,672.16
201,262.25
17,565.07
3,097.53
33,419.06
PNB
37,095.03
UBI
Dena
Bank
OBC
SBI + SBP* IDBI + UBI Dena Bank+ PNB OBC+ BoI ICICI Bank HDFC Bank
Net profit Total business
Name of Bank (~ Cr) (~ lakh cr) CAR (%) Branches
State Bank of India (SBI) 10,891 26.3 12.44 15,869
State Bank of Patiala (SBP) 447.6 1.6 10.38 1,205
SBI + SBP 11,339 27.9 17,074
IDBI Bank (IDBI) 1,121.4 4.4 11.68 1,388
United Bank of India (UBI) -1,213 1.8 9.81 2,001
IDBI + UBI -91.6 6.2 3,389
Dena Bank 552 1.9 11.14 1,633
Punjab National Bank (PNB) 3,343 8.0 11.52 6,200
PNB + Dena Bank 3,895 9.9 7,833
Oriental Bank of Commerce (OBC) 1,139 3.3 11.01 2,126
Bank of India (BoI) 2,729 8.5 9.97 4,646
BoI + OBC 3,868 11.8 6,772
ICICI Bank 9,810.48 6.7 17.70 3,753
HDFC Bank 8,478 6.7 16.1 3,403
As on March 31, 2014; *Not listed; CAR: Capital adequacy ratio; Figures may not add up due to rounding off; Source: Bank websites
MARKET CAPITALISATION (~ cr, as on July 25)