Bank Deal: Bank with ₹5,640 crore capital set to be sold; 4.5 million customers to be directly affected..

Amidst the upcoming bank strike scheduled for next week, significant news has emerged for customers. Citing CNBC-TV18, reports indicate that a major private sector bank in the country is preparing for a sale. Negotiations for this deal are currently underway with another private sector bank. The report states that the transaction between the two banks will be executed through a share swap. Currently, the bank in question has a market capitalization of ₹5,640 crore and a customer base of approximately 4.5 million (45 lakh).

This deal is set to take place between Jana Small Finance Bank and Federal Bank, with negotiations having already progressed significantly. Under the proposed deal, Federal Bank has expressed interest in acquiring all assets and business operations of Jana Small Finance Bank. The transaction will be completed via a share swap, meaning all shares of Jana Small Finance Bank will be transferred to Federal Bank. Deals involving stock swaps have occurred in the banking sector previously; notably, Kotak Mahindra Bank acquired ING Vysya Bank through an equity swap in 2015, and a similar deal took place between AU Small Finance Bank and Fincare Small Finance Bank in 2023.

**Valuation of the Deal**
Sources indicate that the value of a single share of Jana Small Finance Bank has been pegged between ₹620 and ₹650; assuming a share value of ₹350 for Federal Bank, the stock transfer will be executed through a mutual exchange. Federal Bank currently holds a market capitalization of approximately ₹82,000 crore, while Jana Small Finance Bank’s business is valued at around ₹5,600 crore. Following this deal, Federal Bank’s business operations and banking footprint are expected to expand significantly. 

How many people will be affected by the deal?
Sources indicate that Jana Bank currently has a customer base of approximately 4.5 million (45 lakh). An announcement regarding the deal between the two entities could be made within a few weeks. The deal is expected to boost Federal Bank's earnings and potentially expand its lending reach. Shares of Jana Bank closed at ₹533 on Friday, marking a gain of 1.97 percent.

Which bank is involved in the deal, and how many customers will it impact?
The deal involves Jana Small Finance Bank, and it will directly affect approximately 4.5 million customers across the country.

How will this deal between Federal Bank and Jana Small Finance Bank be executed?
What major mergers involving share swaps have previously taken place in the banking sector?