The Indian government has approved the three-way merger of state-run lenders Bank of Baroda, Vijaya Bank and Dena Bank, with Bank of Baroda as the surviving entity, effective April 1.
The merger will be the first three-way consolidation of banks in India and will result in the merged bank becoming the second-largest public-sector bank in the country and possessing scale comparable to global banks, according to a Jan. 2 release.
Meanwhile, the boards of the three banks have approved the merger and the swap ratio for the scheme. Vijaya Bank shareholders will receive 402 equity shares of Bank of Baroda for every 1,000 shares held, while Dena Bank shareholders will get 110 equity shares of Bank of Baroda for every 1,000 shares held, according to a filing by Bank of Baroda.
The combined bank is expected to benefit from economies of scale and wider scope of operations, positioning the company for improved profitability, wider product offerings and adoption of technology and best practices to improve cost efficiency and risk management.
Employees of Vijaya Bank and Dena Bank will transfer to the surviving entity, according to the government release.