Bank of Baroda, Vijaya Bank&Dena Bank to merge operations
HDFC, Tester
On 24th October 2018, Bank of Baroda (BoB), Dena Bank and Vijaya Bank took a call to constitute internal committees to help integrate the banks’ functions before they merge. According to their statements, the process will take 4 to 6 months. The merged entity, comprising two relatively stronger banks and a weak one, will be the third-largest lender in India, after State Bank of India and HDFC Bank Ltd.
Looking back
On 17th September 2018, the Union Finance Ministry announced the proposal to merge these these public sector lenders. The combined lending entity is expected to have a total business of more than Rs 14.82 lakh crore. The amalgamation would be through a share swap, which will be a part of the merger.
The merger would be carried out under an Alternative Mechanism. Finance Minister Arun Jaitley, who heads Alternative Mechanism, assured capital support to the merged entity. Other members of Alternative Mechanism included Railway Minister Piyush Goyal and Defence Minister Nirmala Sitharaman.
Post this merger, the number of Public Sector Undertaking (PSU) banks will come down to 19.
The process
A publication carried a report regarding the merger. According to a source close to the developments, the bankers will appoint 3 separate valuers to arrive at share swap ratios. The valuer appointed by one bank will also evaluate the other two banks before a common ratio is arrived at and sent to the Government, said the source. This was the second meeting after the merger announcement.
The committees will comprise the chief executive officers (CEOs) and executive directors of the three banks. “We have decided to form a few internal committees to integrate functions in the three banks. They include committees on credit, human resources (HR) and information technology (IT),” the source said, requesting anonymity.
The merged entity will have 2,205 branches in western India, while the south and north will have 846 and 713 branches, respectively.
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