New Delhi: Bank of Baroda (BoB) surpassed Punjab National Bank (PNB) to become the country's largest nationalised lender after the merger of Dena Bank and Vijaya Bank with Vadodara-based bank became effective Monday.
The consolidated entity started the operation with a business mix of over Rs 15 lakh crore on the balance sheet, with deposits and advances of Rs 8.75 lakh crore and Rs 6.25 lakh crore, respectively.
BoB, the second largest public sector lender after State Bank of India (SBI), now has over 9,500 branches, 13,400 ATMs, and 85,000 employees to serve 12 crore customers.
The largest nationalised bank now has an expanded capital base and will be in a position to have deeper banking relationship with customers.
To make merger a smooth affair, the government last week decided to infuse Rs 5,042 crore in BoB to enhance its capital base to meet additional expenses.
Meanwhile, BoB completed share allotment to shareholders Dena Bank and Vijaya Bank as per the scheme of amalgamation.
Shareholders of Vijaya Bank got 402 equity shares of BoB for every 1,000 shares held. In the case of Dena Bank, its shareholders received 110 shares of BoB for every 1,000 shares.
The bank on Monday issued and allotted equity shares at approved share exchange ratio pursuant to 'Amalgamation of Vijaya Bank and Dena Bank with Bank of Baroda Scheme, 2019', BoB said in a regulatory filing.
Shares of BoB closed at Rs 132.85 per unit, up 3.14 per cent on BSE on Monday.
The first three-way amalgamation is the first step in the consolidation of public sector banking industry recommended in 1991 by the Narasimham Committee report.
Through this merger the government has created an institution of global scale and size, thereby providing significant benefit to all stakeholders.
Consolidated entity will be able to realise multiple synergy benefits both on cost and revenue sides.
Post-amalgamation, the bank will have a 22 per cent market share in Gujarat and 8-10 per cent market share in Maharashtra, Karnataka, Rajasthan and Uttar Pradesh, the bank has said.
All customers of Dena Bank, which is under prompt corrective action (PCA) framework of the RBI, will have renewed access to credit facilities immediately.
The government in September last year announced the first-ever three-way consolidation of banks in India, with a combined business of Rs 14.82 lakh crore, making it the third-largest bank after State Bank of India (SBI) and HDFC Bank.
The announcement of the three-way merger was among several reforms initiatives undertaken by Financial Services Secretary Rajiv Kumar to make public sector banks (PSBs) healthy, robust and globally competitive.
As part of the reform process, the government had also announced transfer of majority 51 per cent stake to Life Insurance Corporation (LIC) in IDBI Bank in August last year to transform the Mumbai-based lender.
Besides, the Department of Financial Services made a record capital infusion of Rs 1.06 lakh crore in the PSBs in the fiscal 2018-19. As a result five public sector banks including Bank of India, Corporation Bank and Allahabad Bank were out of the prompt corrective action framework of the RBI earlier this year. Non-performing assets (NPAs) showed a negative trend in 2018-19 and reduced by Rs 23,860 crore between April-September 2018.
Following the merger, the number of PSBs has come down to 18.
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Updated Date: Apr 02, 2019 08:56:07 IST