IDBI Bank names Canara Bank as merger target

IDBI Bank believes the union would increase likelihood of expanding presence in three states.

IDBI Bank is the latest to join the consolidation bandwagon with Canara Bank saying that it would look to strengthen its presence in Maharashtra, Gujarat and Haryana. Others such as Union Bank of India have also stated their intent to gain in size by acquiring another bank.

According to a report in Business Standard, IDBI Bank was formed after the conversion of the erstwhile finance institution — Industrial Development Bank of India. Subsequently, it merged IDBI Bank, promoted by it, and acquired United Western Bank.

The bank, though smaller than many of its public sector peers, is in a unique position as the government had told Parliament while repealing the law governing the erstwhile financial institution that the new entity would not be merged with another bank.

IDBI Bank Chairman and Managing Director Yogesh Agarwal said the bank might consider a follow-on public offer to infuse capital for growth this financial year. "We don't need capital infusion for mergers, we need it for business growth and may consider a follow-on issue this financial year if the government approval comes through."