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The Boards of Directors of Bank of Baroda (BoB) also gave in-principle approvals for their merger with another lender Dena Bank and Vijaya Bank in a meeting held on Saturday. i.e. 29/09/2018 for the creation of second largest PSU bank in the country.
After the merger, the asset size of the new entity would be over Rs 14.5 lakh crore. While announcing the merger, Financial Services Secretary Rajiv Kumar had said the merged entity would have better financial strength.
Rajiv Kumar at the time of the announcement claimed that Dena Bank’s net NPA ratio will be at 5.71%, significantly better than public sector banks’ average of 12.13%. The provision coverage ratio would be at 67.5% against the average 63.7%. The cost to income ratio of the combined entity would come down to 48.94%, compared with the average of 53.92%.
The combined business of the merged entities would make it the country’s second-largest public sector bank. The amalgamation of the three banks would be through share swap, which will be a part of the scheme of merger.
In April 2017, State Bank had merged with itself five of its subsidiary banks and took over Bharatiya Mahila Bank, catapulting it among the top 50 global lenders with over $550 billion in combined assets. Post-merger of BoB, Vijaya Bank and Dena Bank, the number of public sector banks will come down to 19.
