Under the new structure an executive director would be put in charge of each region and three banking professionals would be put on the main board, a senior finance ministry official said.
Ceylon Bank Employees Union chief M R Shah says the merger has the support of the workers.
The new bank is expected to be capitalized at 2.8 billion rupees. The government revealed plans to merge the banks in its 2007 budget.
At the same time the government also proposed the merger of SME Bank and Lanka Puthra Bank, which were created after 2004 to give effect to election promises and ended up with massive bad loans shortly after starting up due to politically directed lending.
Critics say the two banks have been favourite targets of politically powerful black listed defaulters.
An earlier plan to merge the two