UBI low net worth led to poor swap ratio: Official

Kolkata, Mar 9 () United Bank of India's low networth led to a poor swap ratio for its merger with PunjabNational Bank (PNB) as compared to Oriental Bank of Commerce(OBC), an industry official said on Monday.

PNB, in a regulatory filing, had announced the shareexchange ratio in accordance with the scheme of amalgamation,as it is set to merge OBC and UBI into itself with effect fromApril 1.

According to the swap ratio, 1,150 equity shares ofPNB are to be exchanged for every 1,000 equity shares of OBC,while 121 equity shares of PNB are to be swapped for every1,000 equity shares of UBI.

PNB will be the anchor bank post the merger.

The merged entity will be second largest PSU bank inIndia, and March 25 has been fixed as the record date for theshare allotment.

The official told that UBI had been running intolosses for some time, except for the last four quarters.

"However, OBC got capital infusion from the governmentwhich UBI did not. This capital infusion helped OBC to providefor the losses which resulted in a higher net worth unlikeUBI," he said.

"UBI shareholders will have to keep their holding forat least two years, after which they can make some money," headded.

The official said that post the amalgamation, theentity will be named Punjab National Bank and have a new non-executive chairman, which will be appointed by the government.

The Union Cabinet had approved the merger on March 4. DCRBT RBT