Finance Ministry’s Alternative Mechanism gives nod for Bank of Baroda, Dena, Vijaya Bank merger

By: |
New Delhi | Published: December 21, 2018 6:16:56 PM

Public sector lender Bank of Baroda Friday said the 'Alternative Mechanism' of the finance ministry has accorded in-principle approval for its merger with Dena and Vijaya Bank.

Finance Ministry, Bank of Baroda, Dena bank, Vijaya Bank merger, Arun Jaitley, State Bank of IndiaThe ‘Alternative Mechanism’ (AM) headed by Finance Minister Arun Jaitley had decided to merge three banks with a view to create global size lender, which will be stronger and sustainable. (Reuters)

Public sector lender Bank of Baroda Friday said the ‘Alternative Mechanism’ of the finance ministry has accorded in-principle approval for its merger with Dena and Vijaya Bank. “Ministry of Finance, Department of Financial Services on 20th December 2018 has advised that the Alternative Mechanism (AM) has accorded its in-principle approval to the proposed amalgamation of Bank of Baroda, Vijaya Bank and Dena Bank,” it said in a regulatory filing. Bank of Baroda is the transferee bank, while Vijaya Bank and Dena Bank are the transferor banks in the amalgamation process, it added.

The ‘Alternative Mechanism’ (AM) headed by Finance Minister Arun Jaitley had decided to merge three banks with a view to create global size lender, which will be stronger and sustainable. Following which, the board of directors of Bank of Baroda had given an in-principle approval for the proposed merger of the three state-owned lenders on September 29. Both the other banks have also approved the merger proposal at their respective board levels.

Also read| Selling out of trouble: IL&FS invites EoIs for education, AIF businesses

The new entity to be formed with the merger of Bank of Baroda, Vijaya Bank and Dena Bank is expected to be operational in the beginning of the next financial year. The merged entity will have a combined business of Rs 14.82 lakh crore, making it the third largest bank after SBI and ICICI Bank. It will have better financial strength. The net NPA ratio will be at 5.71 per cent, significantly better than public sector bank (PSB) average (12.13 per cent).

The merger of these three lenders comes after India’s top lender State Bank of India (SBI) merging its five subsidiary banks and taking over Bharatiya Mahila Bank last year, which has catapulted it to be among top 50 global lenders. Shares of Bank of Baroda traded 0.30 per cent up at Rs 115.20 apiece on BSE.

For latest coverage on Maharashtra Assembly Election 2019 and Haryana Assembly Election 2019, log on to financialexpress.com. We bring you full coverage of Assembly Election 2019 on Financial Express, stay tuned for latest election updates.

Get live Stock Prices from BSE and NSE and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.