The merger of Bank of Baroda (BoB), Dena Bank and Vijaya Bank will create the largest banking entity in Gujarat, and will challenge the market leader State Bank of India (SBI) in the state
Union finance minsiter Arun Jaitley on Monday announced the proposed merger of Vijaya Bank and Dena Bank with Bank of Baroda. Assuring that the amalgmation will benefit all the parties involved, the finnace minister also informed that the Reserve Bank of India was also consulted regarding the merger. If it happens, the entity after the merger of the Vijaya Bank, Dena Bank and Bank of Baroda will create the third largest bank in India. It will also be directly competing the largest bank SBI in state of Gujarat.
But what it means for the employees of these banks and how will it impact the customers? Regarding the employees, the finance minister repeatedly assured that the staff will not be impacted negatively. However, the employees do not share the same thoughts.
Below we have listed out 10 points regarding the much-talked about merger.
1. The merger is expected to create India’s third largest bank, having a total business of around Rs 14.8 lakh crore. It will have gross advances of Rs 6.4 lakh crore and deposits of Rs 8.4 lakh crore.
2. FM has ensured that employees’ interest would be protected, but the government will have to look at a lean and mean structure, going forward.
3. The merger of Bank of Baroda (BoB), Dena Bank and Vijaya Bank will create the largest banking entity in Gujarat, and will challenge the market leader State Bank of India (SBI) in the state
4. BoB has the second largest banking network in Gujarat, just below market leader SBI, while Dena Bank has the third largest network in Gujarat.
5. Vijaya Bank, among the only two lenders to have reported a profit in 2017-18, has a strong credit culture.
6. Customers of the three state-run banks are set to benefit from the proposed amalgamation of Dena Bank and Vijaya Bank, two relatively small banks, with Bank of Baroda (BOB).
7. Customers of Dena Bank and Vijaya Bank will get to be a part of a larger and a wider banking network.
8. The merger process will also consolidate the non-performing assets of the three banks at Rs 80,000 crore, resolutions of which may be put on the back burner as the banks will have to tackle issues related to the amalgamation.
9. Moody's Investors Service Tuesday said the plan to merge Bank of Baroda, Vijaya Bank and Dena Bank will be credit positive as it would improve their efficiency and governance.
10. Meanwhile, finance minister Arun Jaitley is likely to meet the bank chiefs on September 25 to review the performance of the public sector banks (PSBs).
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