Vijaya Bank and Dena Bank to be merged with Bank of Baroda

The Union cabinet has approved merger of Bank of Baroda, Vijaya Bank and Dena Bank. Both Vijaya Bank and Dena Bank would be merged with Bank of Baroda. The merged entity would emerge as India's second largest public sector bank (PSB). This is the first even three-way consolidation of banks in India and the scheme of amalgamation will begin from 1 April 2019.

"The amalgamation will help create a strong, globally competitive bank with economies of scale and enable realisation of wide-ranging synergies. Leveraging of networks, low-cost deposits and subsidiaries of the three banks have potential of yielding significant synergies for positioning the consolidated entity for substantial rise in customer base, market reach, operational efficiency, wider bouquet of product and services and improved access for customers," the cabinet committee on economic affairs (CCEA) said in a statement.

According to the Committee, Dena Bank's strength lies in its relatively higher access to low-cost current account saving account (CASA) deposits, while Vijaya Bank has good profitability and availability of capital for growth. Extensive reach and global network and offerings of BoB will translate into advantages in terms of market reach, operational efficiencies and the ability to support a wider offering of product and services, the statement says.

 

Every permanent and regular officer or employee of Vijaya Bank and Dena Bank will become an officer or employee and will hold his office or service in BoB such that the pay and allowance offered to the employees and officers of both the merging lenders should not be less favourable as compared to what they would have drawn in the current employer banks.