The union government on Monday announced that it has decided to facilitate a merger of Dena Bank, Vijaya Bank and Bank of Baroda.
"Merger of the three banks will make this the third largest bank of the country," Department of Financial Services(DFS) Secretary Rajiv Kumar said during a media briefing here.
The consolidation of the three banks is expected to create a strong globally competitive bank with economies of scale and enable realisation of wide-ranging synergies. Leveraging of networks, low-cost deposits and subsidiaries of the three banks has the potential of yielding significant synergies for positioning the consolidated entity for a substantial rise in customer base, market reach, operational efficiency, a wider bouquet of products and services, and improved access for customers.
While the Provision Coverage Ratio (PCR) following the merger, is expected to be 67.5 per cent, which is well more than most Public Sector Banks (PSBs), the net Non-Performing Assets (NPA) ratio is expected to fare better at 5.71 per cent. It has also been envisaged that all the three banks will be immensely benefited from the amalgamation.
While the Dena Bank's strength in Ministry of Micro, Small and Medium Enterprises (MSME) sector will further augment the strength of the other two banks, the Bank of Baroda's existing global strength will help the other two, namely, the Dena Bank and the Vijaya Bank.
It is also believed that a wide range of products and services through leveraging of bank subsidiaries will be offering more value-added non-banking services and products.
During the presser, Finance Minister Arun Jaitley said the consolidation of banks was announced during the Budget, the first step towards which was taken today.
However, the Finance Minister clarified that the consolidation of the three entities would not have any adverse effect on the employees working in these banks.
"No employee will face any service conditions which are adverse in nature. The best of the service conditions will apply to all of them," he affirmed.
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