AU Small Finance Bank’s Merger with Fincare SFB: Expanding Horizons

On April 1, 2024, AU Small Finance Bank (AU SFB) amalgamated Fincare Small Finance Bank (Fincare SFB), marking the first such consolidation in the sector.

Details of the Amalgamation

The all-stock merger deal was first announced on October 29, 2023, where the shareholders of Fincare Small Finance Bank received 579 equity shares in AU Small Finance Bank for every 2,000 equity shares held in Fincare Small Finance Bank. The merger got final approval from the RBI on March 4, 2024, with an effective date of April 1, 2024.

In an exchange filing, AU Small Finance Bank stated that the merger is anticipated to offer them enhanced access to South India, particularly expanding its distribution network. This expanded presence will facilitate the bank’s various products and services to a broader customer base, strengthening its market position in the region.

AU Small Finance Bank further added that with this acquisition, they become a formidable banking franchise with a combined base of more than 1 crore customers, a network of over 2,350 physical touchpoints and 43,500 employees. They will be available across 25 states and union territories, having a deposit base of ₹89,854 crore and balance sheet size of

₹1,16,695 crore (all numbers are as of December 31, 2023, on a proforma basis).

In 2015, RBI granted a licence to 10 entities to set up Small Finance Banks to offer basic banking services to small farmers and micro industries. Following the regulator’s grant of licence, this is the first merger and acquisition that took place.

As part of this merger, Mr Rajeev Yadav, former MD and CEO of Fincare SFB, has been designated as the Deputy CEO of AU SFB and shall continue to lead all key asset businesses of Fincare SFB, now housed within the Fincare Unit at AU SFB.

AU SFB recently consolidated its operations into 5 business groups, and the ‘Fincare Unit’ shall become its 6th business group. Besides, Mr Uttam Tibrewal, Executive Director at AU SFB, has been elevated to Deputy CEO and Executive Director, AU SFB.

Commenting on the merger, Founder, MD & CEO of AU Small Finance Bank, Sanjay Agarwal stated, “This merger underscores our commitment to financial inclusion and with our combined strength, we can serve all segments of customers, including low-income households, HNIs as well as MSMEs, through physical and digital channels both, offering a holistic bouquet of products, including cross-border business that will get launched soon under the Authorized Dealer – Category I license (AD Cat-I).”

On April 2, 2024, the AU SFB share price opened at ₹593.00, touching the day’s high at ₹597.55, as of 11:54 AM on the NSE.

About AU Small Finance Bank Limited

AU Small Finance Bank provides a wide range of banking and financial services, such as retail banking, wholesale banking and other services.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.