New Delhi: The boards of directors of Centurion Bank Limited and Bank of Punjab Limited today approved the merger of the two banks. The combined bank will be called Centurion Bank of Punjab and will build upon the strong brand identities of the two banks in their respective markets.

The proposal is subject to all the requisite statutory, regulatory and shareholder approvals.

Centurion Bank's chairman Rana Talwar, and MD Shailendra Bhandari, will be the chairman,. and managing director respectively of the merged entity, while Tejbir Singh, executive director, Bank of Punjab will be the whole-time executive director. The appointments are subject to regulatory approvals.

The share swap ratio has been fixed at 4:9 - for every four shares of Bank of Punjab, its shareholders will receive nine shares of Centurion Bank. KPMG India Private Limited and NM Raiji & Co. are the independent valuers and Ambit Corporate Finance is the sole investment banker to the transaction.

After the merger, the bank will have total assets of Rs9,395 crore and deposits of Rs7,837 crore.

The merger will change the holding pattern in the bank. Bank of Muscat, which holds 31 per cent in Centurion Bank, will now hold 25 per cent in the merged bank. Similarly, the holdings of Capital Corporation and Sabre Capital, which were 14 per cent and 5.4 per cent respectively in Centurion Bank will come down to 11 per cent and 4.4 per cent respectively in the new bank. The 27 per cent holding of Tejbir Singh in BOP, will also come down to 5per cent.

Commenting on the merger Talwar said, "The combination of Centurion Bank and Bank of Punjab will create one of the strongest full service banks in the country. Centurion Bank of Punjab will have a nationwide network and a very strong presence in the retail, SME and agricultural sectors. Both Bank of Punjab and Centurion Bank are very strong brand names in their respective markets and Centurion Bank of Punjab will build upon these powerful brands."

Talwar adds, "Centurion Bank of Punjab will have powerful earnings potential and will follow world class standards of balance sheet management and provisioning. Both banks have excellent young motivated staff and I am confident that we will together be able to accelerate the growth of our businesses in our core markets. This is a landmark event for Centurion Bank of Punjab and for private sector banks in our country. It is fully aligned with the guidelines prescribed by our regulators."

Commenting on the combination of the two banks, Singh, stated, "The growth momentum of both banks will now combine and the resulting multiplier effect will produce electrifying results. The two banks represent a perfect fit in all respects with virtually negligible overlaps. With this, the vision of our great founder Dr. Inderjit Singhji will be fulfilled. His vision of greater growth and accelerated employment in Punjab and Haryana and particularly the rural areas and his vision of presence across the country."

Bhandari added, "The combined entity will have significant synergies. Centurion Bank of Punjab will have strong capital adequacy, NPA's well under control and one of highest net interest margins in the industry. It will also provide great growth opportunities for the staff of both organizations. We are confident that with over 2.2 million customers, Centurion Bank of Punjab will be a force to reckon with."