New Delhi: Paving the way for the first ever-three way merger of public sector lenders, the Cabinet Wednesday approved amalgamation of Dena Bank and Vijaya Bank with Bank of Baroda that would create the country’s third largest lender. Law Minister Ravi Shankar Prasad said there would be no retrenchment of employees and that their services conditions would also not be affected post merger. The boards of the three banks have also cleared the share-swap ratio for the proposed amalgamation. As per the Scheme of Amalgamation announced by Bank of Baroda, shareholders of Vijaya Bank would get 402 equity shares of BoB for every 1,000 shares held in the bank. In case of Dena Bank, the shareholders would get 110 shares of BoB for every 1,000 shares owned in the bank. The scheme would come into force on April 1, 2019. At a media briefing, Prasad said the Cabinet has approved the amalgamation of Dena Bank and Vijaya Bank with BoB. “There will be no impact on the service conditions of the employees and there will be no retrenchment following the merger,” Prasad said.
He also said that the amalgamation would help create a strong globally competitive bank with economies of scale and enable realisation of wide-ranging synergies. The amalgamation would be the first-ever three-way consolidation of banks in India, with a combined business of Rs 14.82 lakh crore, making it the third largest bank after SBI and ICICI Bank. The merger would also create the second largest public sector bank. Post this merger, the number of PSU banks will come down to 18. “Leveraging of networks, low-cost deposits and subsidiaries of the three banks has the potential of yielding significant synergies,” Prasad said. It would position the consolidated entity for substantial rise in customer base, market reach, operational efficiency, wider bouquet of products and services, and improved access for customers, he added.