India’s big state-run lenders plunge on mega-merger plans

Bloomberg

Investors knocked down shares of India’s large state-run banks after the government unveiled its plan to merge several of the lenders, amid concerns that the integration process might delay a bad-loan cleanup and slow lending approvals.
The four key large lenders at the center of the merged groups — Punjab National Bank, Canara Bank, Union Bank of India and Indian Bank — fell on Tuesday as investors fretted over the impact of absorbing their weaker peers. The mergers were announced after the market shut last week.
While PM Narendra Modi’s government is keen for banks to give more loans to boost an economy growing at its slowest in six years, the timing of the mergers means that management attention may shift to realigning resources and processes. That could leave them little time to focus on their key immediate task of cleaning up the worst stressed-asset ratio among major economies.
Bank of Baroda, which earlier absorbed Dena Bank and Vijaya Bank, has lost 40 percent of its market value since the merger was announced a year ago.