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Centre merges Bank of Baroda, Vijaya Bank, Dena Bank

Centre merges Bank of Baroda, Vijaya Bank, Dena Bank

On Monday the government said that state-owned Bank of Baroda, Vijaya Bank and Dena Bank will be merged to create the country's third largest lender. The newly merged entity would be the third largest bank of the country, said Financial Services Secretary Rajiv Kumar.

"Alternative mechanism under Finance Minister, Arun Jaitley suggests bankofbaroda, VijayaBankIndia & dena_bank to consider amalgamation; to create India's 3rd largest globally competitive bank", he tweeted on Monday evening.

But these PSU banks also account for the lion's share of bad loans or NPAs plaguing the sector and need crores of rupees in new capital in the next two years to meet global Basel III capital norms.

Also, many banks were in a fragile condition due to excessive lending and ballooning NPAs, he said. "We have made a decision to merge Dena Bank, Vijaya Bank and Bank of Baroda".

Now what?The respective boards of each bank will now vote on the merger and if approved, will commence preparations on a plan for the amalgamation of the three entities and decide on a share-swap ratio. Meanwhile, All India Bank Employees' Association has opposed the move saying what is required is an expansion of banks and not a merger of banks. However, he assured that no employee will face any service conditions which are adverse in nature and the best of the service conditions will apply to all of them.

Coca Cola is in serious talks to produce marijuana-infused drinks'
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Earlier the government merged State Bank of India's associate banks with the parent, and let Life Insurance Corporation take over bad debt-ridden IDBI Bank. "Meanwhile, given persistent structural challenges facing mid-sized banks, we continue to maintain our cautious stance (despite trading gains in the immediate term)", said Edelweiss Securities in a recent note to its investors. He referred to the government's announcement in the budget where it had said consolidation of banks was on their agenda.

Government owns a majority stake in 21 lenders, which account for more than two-thirds of banking assets. The Bank of Baroda's bad loan ration now stands at 12.4 percent. The gross NPA ratio now stands at 22 percent which is the highest in the banking industry.

"It was only after 2015 that the real picture was known and the government and the RBI started taking concrete steps".

Allahabad Bank reported Rs 4,674 crore net loss for FY18 with the ratio of gross non-performing assets being at 15.96%.


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