Performance of Canara Bank and Syndicate Bank before the Merger: A CAMEL Model Analysis

Abstract

Banks use mergers and acquisitions as one of the most common corporate restructuring strategies to diversify or develop their operations. Due to the arrival of new competitors and products with advanced technology, globalisation of the financial markets, changing customer behaviour, expanded services at a lower cost, and other factors, the Indian banking system has changed dramatically in recent years in terms of mergers and acquisitions. As a result the Indian banking system has been strengthened. Canara Bank and Syndicate Bank merged in 2019 to improve efficiency and centralise operations. The purpose of this descriptive and analytical study is to use the CAMEL model to analyse the financial performance of Canara Bank and Syndicate Bank prior to the merger period (2014-15 to 2018-19). Finally, it can be concluded that the Syndicate Bank is considered to be the best performer, while the Canara Bank is a poor performer, and it needs to improve its performance with respect to capital adequacy, assets quality, and liquidity. In other words, before the merger, there was a significant difference in Canara Bank and Syndicate Bank’s performance.