Amalgamation of BOB, Vijaya Bank and Dena Bank Gets Nod
The Boards of Bank of Baroda (BOB), Dena Bank and Vijaya Bank have approved the share swap ratio for the proposed amalgamation of the three banks. This step follows the approval of amalgamation accorded by the Central Government. The Union Cabinet approved amalgamation of these three public sector commercial banks with Bank of Baroda as the transferee bank and Vijaya Bank and Dena Bank as transferor banks. This enables the Bank of Baroda to retain the name for the merged entity. This is the first three way consolidation of banks in India. The merger of the banks will be effective from April 1, 2019. The merged entity will become the second largest bank in public sector and third largest among all commercial banks in India.
Share swap ratio for the bank merger of BOB, Vijaya Bank and Dena Bank
Based on the swap ratio approved by the boards of the three banks, Dena Bank and Vijaya Bank shareholders will get 110 and 402 shares of Bank of Baroda respectively for each 1,000 shares held. The face value of one share of BOB is Rs. 2 where as that of Vijaya Bank and Dena Bank are Rs. 10 each. A Grievance Redressal Committee (GRC) has been set up to address the grievances of minority shareholders. The committee is headed by Pramod Kode, a retired judge of Mumbai High Court.
Business position of merged BOB
On completion of merger, all businesses, assets, rights, titles, claims, licences, approvals and other privileges and all property, all borrowings, liabilities and obligations of / by Vijaya Bank and Dena Bank will vest with BOB. This will make BOB the second largest public sector bank in the country after State Bank of India. In this process Punjab National Bank, the present second largest public sector will be pushed to the third position. Among all the commercial banks operating in the country, including the private sector banks, BOB will be in third position after SBI and HDFC Bank.
Strengths of amalgamated Bank of Baroda
Vijaya bank is known for its profitability and sufficiency of capital. Dena bank has better access to low cost deposits. BOB has a strong global network and plethora of services. Hence the amalgamated entity will create a globally competitive bank with wide ranging synergies. The total business of merged entity will be in the range of Rs. 15 lakh crore with 9,500 domestic branches.
It is widely expected that the amalgamated bank will be in a better position to adapt the changing banking environment to meet the credit demands arising from a growing economy. The bigger entity will have more strength to absorb business and economic shocks and better capacity to raise resources.
Merged BOB and employees in Dena Bank and Vijaya Bank
It is clarified that every permanent officer or employee in Dena Bank and Vijaya Bank will become an officer or employee in the merged entity and that the pay and allowances will be protected. However, organizations of employees are of the view that what is needed for India is expansion of banks and not consolidation. A section of the bank employees had on a nation wide strike against the amalgamation in the last week of December 2018.
