It is advantage BoB over Vijaya, Dena Bank

Bank of Baroda's board has approved the three-way merger with share swap ratio that marginally positive to the bank. The Central Cabinet approved the first-ever three bank merger deal in which Vijaya Bank and Dena Bank will merger into Bank of Baroda (BoB).

The merged bank will be India's third largest bank after SBI and ICICI Bank. On Wednesday evening, the government issued a notification confirming that Vijaya Bank and Dena Bank would be transferor banks and BoB, the transferee bank. The amalgamation will come to effect on April 1, 2019. The notification also assured that all the employees of transferor banks will be retained and their pay and allowance will continue as earlier.

As for the swap ratio, BoB's board has decided on giving 402 equity shares of BoB for every 1,000 shares of Vijaya Bank and 110 equity shares of BoB for every 1,000 equity shares of Dena Bank. BoB is not paying a premium for Vijaya and Dena Bank and will benefit in terms of scale and become more competitive in India and globally.

Reacting to this confirmation from the government, the stock of the strongest of the three banks Bank of Baroda was trading positive at Rs. 120.35 per share, up by 0.80 per cent, whereas Vijaya Bank dipped 6.37 per cent and was quoting Rs. 47.80, and the weakest of them Dena Bank lost 17.83 per cent and was trading at Rs. 14.75 per share on Thursday at 10:15 am.