Share price falls: A file picture showing a man reading a newspaper outside a Punjab National Bank branch in Ahmedabad. Its shares fell the most following the announcement of the merger plan. — Reuters
SINGAPORE: Equity analysts predict that India’s move to merge several of its state banks will slow their loan growth, and many brokers advise buying shares of the lenders’ rivals who stand to benefit from the uncertainty.
While the mergers will reduce the number of state-owned banks to 12 from 27 and are aimed at creating bigger and healthier lenders, the time needed for integration and challenges related to staff, branch and process overlaps are expected to be the main immediate risks.
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