Bank of Baroda, Dena, Vijaya Bank merger to up operating efficiencies of new entity: Crisil Ratings report

Crisil Ratings in its report said the success of the three-way merger will be crucial as it will pave the revival path for other weak public sector banks (PSBs)

Press Trust of India September 19, 2018 19:12:45 IST
Bank of Baroda, Dena, Vijaya Bank merger to up operating efficiencies of new entity: Crisil Ratings report

Mumbai: The government's move to merge two stronger banks - Bank of Baroda (BoB) and Vijaya Bank - with weak Dena Bank would ensure the stability of operations and credit profile of the merged entity, a report said Wednesday.

The government Monday said BoB, Vijaya Bank and Dena Bank will be merged to create the country's third-largest lender.

Crisil Ratings in its report said the success of the three-way merger will be crucial as it will pave the revival path for other weak public sector banks (PSBs), mainly those under the RBI's prompt corrective action (PCA) framework.

Bank of Baroda Dena Vijaya Bank merger to up operating efficiencies of new entity Crisil Ratings report

Representational image. Reuters

"Such consolidation will engender economies of scale, and can structurally improve operating efficiencies and governance," said Krishnan Sitaraman, senior director, Crisil Ratings.

The merger will reduce the capital burden for the government over the long term, and enable better management of a smaller set of large PSU banks, the rating agency said.

With fewer PSBs around, capital allocation, performance milestones and monitoring would become easier for the government, it added.

"Any merger of the scale envisaged in the BoB-Dena-Vijaya case will entail near-term pain for the consolidated entity. However, the long-term structural
benefits are compelling enough to push forth on the consolidation path," said Sitaraman.

The report said assurance by the government that jobs of employees will be protected and service conditions will not be adversely impacted should reduce the potential for employee discontent.

Last year, State Bank of India merged with itself five of its subsidiary banks and took over Bharatiya Mahila Bank, catapulting it to be among top 50 global lenders.

Updated Date:

also read

Petrol and diesel prices unchanged for eighth day; here are fuel rates in your city today on 25 July 2021
India

Petrol and diesel prices unchanged for eighth day; here are fuel rates in your city today on 25 July 2021

Petrol and diesel prices: Petrol price in Delhi stands at Rs 101.84 per litre while diesel is available for Rs 89.87. In Mumbai, petrol is retailing at Rs 107.83, while diesel costs Rs 97.45

Petrol price nears Rs 108/litre in Mumbai; Highest ever. Know latest fuel rates
Business

Petrol price nears Rs 108/litre in Mumbai; Highest ever. Know latest fuel rates

Petrol and diesel price today: In Delhi, petrol prices remained at Rs 101.84 a litre while the rate of diesel was at Rs 89.87. Check latest rates in your city. Latest Petrol and diesel prices at Firstpost.com

Petrol, diesel prices remain unaltered today: Check rates here
India

Petrol, diesel prices remain unaltered today: Check rates here

Petrol and diesel price today: In Mumbai, petrol can be bought at Rs 107.83 per litre and diesel costs Rs 97.45 for one litre. Check latest rates in your city. Latest Petrol and diesel prices at Firstpost.com