Bank merger: Swap ratio fair for Dena, not for Vijaya Bank, say analysts

The swap ratio appears fair in respect to Dena Bank, given its multiple challenges, but Vijaya Bank shareholders have little to gain from the merger, say analysts at Motilal Oswal Financial Services.

The Union Cabinet on Wednesday approved the proposed merger of Vijaya Bank and Dena Bank with Bank of Baroda. After the merger, the merged entity will be India’s second-largest public-sector bank and third-largest lender. The banks also fixed a share-swap ratio for the merger and aim to close the deal by April 1.

Here are the key details of the deal

On January 2, the Bank of Baroda (BoB) board approved the merger of Dena Bank and Vijaya Bank with it using the following share-swap ratios:

(a) 402 equity shares of BoB for every 1,000 equity shares of Vijaya Bank,