Dena Bank Board Clears Merger Proposal With Bank Of Baroda
The combined business of Dena Bank, Bank of Baroda and Vijaya Bank would make it second largest state-run bank, after SBI.
The board of the state-run Dena Bank today approved its merger with Bank of Baroda, and Vijaya Bank.
Last week, the government announced the merger of Bank of Baroda, Vijaya Bank and Dena Bank to create the country's second largest lender by assets and branches.
“The board meeting has decided to recommend for amalgamation of our bank with Bank of Baroda and Vijaya Bank," Dena Bank said in an exchange filing. The consolidation would enable the creation of a bank with business scale comparable to global banks and capable of competing effectively in the country and globally, it said.
Amalgamation of our bank with Bank of Baroda and Vijaya Bank would result in a strong amalgamated bank, equipped with financial cushion to deal with post-amalgamation requirements during the stabilisation phase.Dena Bank in an exchange filing.
Consolidation would also provide impetus to building banks with scale, ramping up credit growth, adoption of best practices across amalgamating entities for cost efficiency and improved risk management and financial inclusion through wider reach, it said.
The combined business of amalgamated entities would make it second largest state-run bank, after State Bank of India. As of June 2018, the combined business mix of these three lenders stood at Rs 14.82 trillion.
While announcing the merger last week, financial services secretary Rajiv Kumar had said that the merged entity would have better financial strength.
Dena Bank's net non-performing assets ratio will be at 5.71 percent, significantly better than the public sector banks' average of 12.13 percent, he said, adding so would be the provision coverage ratio at 67.5 percent against an average of 63.7 percent and cost to income ratio of the combined entity would come down to 48.94 percent as compared to an average of 53.92 percent.
The amalgamation of the three banks would be through share swap which will be the part of scheme of merger. In April 2017, State Bank had merged with itself five of its subsidiary banks and taking over Bharatiya Mahila Bank, catapulting it to be among top 50 global lenders with over $550 billion in combined assets.
Post-merger of Bank of Baroda, Vijaya Bank and Dena Bank, the number of PSU banks will come down to 19.