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BoB merges Dena, Vijaya into self… now India's 2nd largest PSB

BoB merges Dena, Vijaya into self… now Indias 2nd largest PSB

New Delhi/ Mumbai/ Bengaluru: Bank of Baroda (BoB) on Monday became the second largest state-owned lender after merging Dena Bank and Vijaya Bank into itself as part of the first three-way amalgamation. The consolidated entity has started its operations with a business mix of over Rs 15 lakh crore of balance sheet, with deposits and advances of Rs 8.75 lakh crore and Rs 6.25 lakh crore respectively.

Bank of Baroda now has over 9,500 branches, 13,400 ATMs and 85,000 employees to serve 12 crore customers. Meanwhile, Bank of Baroda completed share allotment to shareholders of Dena Bank and Vijaya Bank as per the scheme of amalgamation. Shareholders of Vijaya Bank got 402 equity shares of BoB for every 1,000 shares held.

In the case of Dena Bank, its shareholders received 110 shares of BoB for every 1,000 shares. The bank on Monday issued and allotted equity shares at approved share exchange ratio pursuant to 'Amalgamation of Vijaya Bank and Dena Bank with Bank of Baroda Scheme, 2019', BoB said in a regulatory filing.

Post-amalgamation, the bank will have a 22 per cent market share in Gujarat and 8-10 per cent market share in Maharashtra, Karnataka, Rajasthan and Uttar Pradesh, the bank has said. All customers of Dena Bank, which is under prompt corrective action (PCA) framework of the RBI, will have renewed access to credit facilities immediately.

The government in September last year announced the first-ever three-way consolidation of banks in India, with a combined business of Rs 14.82 lakh crore, making it the third-largest bank after State Bank of India (SBI) and HDFC Bank.

The announcement of the three-way merger was among several reforms initiatives undertaken by Financial Services Secretary Rajiv Kumar to make public sector banks (PSBs) healthy, robust and globally competitive.

As part of the reform process, the government had also announced transfer of majority 51 per cent stake to Life Insurance Corporation (LIC) in IDBI Bank in August last year to transform the Mumbai-based lender.

Besides, the Department of Financial Services made a record capital infusion of Rs 1.06 lakh crore in the PSBs in the fiscal 2018-19.

As a result five public sector banks including Bank of India, Corporation Bank and Allahabad Bank were out of the prompt corrective action framework of the RBI earlier this year. Non-performing assets (NPAs) showed a negative trend in 2018-19 and reduced by Rs 23,860 crore between April-September 2018. Following the merger, the number of PSBs has come down to 18. Meanwhile, the Reserve Bank of India (RBI) has reshuffled lead bank responsibilities in some districts of Chhattisgarh, Gujarat, Karnataka and Union Territory Dadra & Nagar Haveli following the merger of Dena Bank and Vijaya Bank with Bank of Baroda.

Amalgamation of Vijaya Bank and Dena Bank with Bank of Baroda has been notified on January 2, 2019. The notification has come into force on April 1, 2019, the RBI said in a notification. Following the merger, the RBI has decided to assign the lead bank responsibility of districts hitherto held by Vijaya Bank and Dena Bank, the central bank said.

The lead bank responsibility in seven districts in Chhattisgarh has been assigned to Bank of Baroda from Dena Bank. In Gujarat, Ahmedabad and Gandhinagar will get SBI as the lead banker from Dena Bank earlier. While eight other districts in the state will be deputed to Bank of Baroda from Dena Bank.

Three districts in Karnataka goes to Bank of Baroda from Vijaya Bank. "There is no change in the lead bank responsibilities of the other districts across the country," the RBI said.

As Bank of Baroda, Dena Bank and Vijaya Bank merged to form the second largest public sector bank in the country, the unified management Monday said it would benefit customers, as well as employees in a big way. Vijaya Bank was founded in Karnataka's Dakshina Kannada district in 1931 by A B Shetty. Dena Bank, named after its founder Devkaran Nanjee, came into being in 1938 in Mumbai.

The consolidated bank would have more than 13,400 Automated Teller Machines and above 85,000 employees to serve over 120 million customers, said the officials at a press conference here to share details about the merger.

"The 120+ million customers will experience superior banking services and benefit from wider product range including cash management solution, supply chain financing, financial planning, wealth management," said Birendra Kumar, general manager of Bank of Baroda zonal office here. Kumar added that the employees will benefit from the diverse opportunities.

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