DAINIK NATION BUREAU
The Cabinet Committee on Economic Affairs (CCEA) has approved the merger of state-run Vijaya Bank, Bank of Baroda and Dena Bank on wednesday. With these merger this would become become the third largest bank in the country, after SBI and ICICI Bank. It will be applicable by April 1, 2019. This was disclosed by the government by releasing a statement.
As per the merger, Bank of Baroda will be the transferee bank while the other two public sector banks will be transferor banks. It means the businesses of Vijaya Bank and Dena Bank will be transferred to Bank of Baroda.
The undertakings owned by Vijaya Bank and Dena Bank that will be transferred to the third state-run lender will include assets, liabilities, rights, titles, claims, licenses, approvals, privileges and properties.
“There will be no impact on the service conditions of the employees and there will be no retrenchment following the merger,” Union Minister Ravi Shankar Prasad told reporters.
All permanent and regular officials of Vijaya Banks and Dena Bank will also be transferred to the merged entity.
The board of Bank of Baroda has made accountable to take care of all transferring employees and officers of the transferor bank. It will help create a strong, globally competitive bank with economies of scale and enable realisation of wide-ranging synergies. Public at large will benefit in terms of enhanced access to banking services, the government noted.
The Bank of Baroda board approved a share exchange ratio under the merger subject to regulatory approvals. As part of the merger, Bank of Baroda will issue 402 shares of Rs. 2 each for every 1,000 Vijaya Bank shares of Rs. 10 each, and 110 shares of Rs. 2 each for every 1,000 Dena Bank shares of Rs. 10 each.
The clearance to the amalgamation plan by the government comes after nearly 10 lakh bank officials called a strike on two days to protest against the proposed merger and press for immediate settlement of wage negotiations.
In September 2018, the government had introduced its plan to merge the three lenders as part of efforts to tackle a pile of bad loans plaguing the banking sector.
Currently 21 state-run banks in the country – holding two-thirds of assets in the sector – account for the bulk of the record $150-billion of soured loans last year.