PSB stocks plunge up to 10.6% post-merger announcement

New Delhi: Public sector bank stocks, led by Canara Bank, Union Bank and Punjab National Bank, tumbled up to 10.6 per cent on Tuesday after the government announced the merger of 10 state-run lenders into four.

Shares of Canara Bank dropped 10.59 per cent, Union Bank of India fell 9.08 per cent, Punjab National Bank plunged 8.55 per cent, Oriental Bank of Commerce fell 8.10 per cent and Allahabad Bank dropped 5.67 per cent on the BSE.

Corporation Bank fell 3.98 per cent, while Syndicate Bank dropped 1.08 per cent. However, Andhra Bank gained 0.51 per cent and United Bank rose by 0.38 per cent. Equity markets were closed on Monday for 'Ganesh Chaturthi'.

Continuing its firefight against the deepening economic slowdown, the government on Friday unveiled a mega plan to merge 10 public sector banks into four with a view to creating fewer and stronger global-sized lenders with robust balance sheets that can be used to boost credit and spur growth.

The mergers announced on Friday, together with two set consolidations done last year, will reduce the number of public sector banks to 12 from 27 in 2017.