BANK OF BARODA, VIJAYA BANK & DENA BANK MERGE

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The combined bank will have

  • More than 34% of low cost deposits
  • Total turnover of over Rs. 14.82 lakh crore (BOB 10.28 +VB 2.79+ Dena 1.72) which is the third largest)
  • Capital buffer of nearly 12%

The big bank merger is coming up with Government announcing  the merger of three Public Sector Banks viz Bank of Baroda, Vijaya Bank and Dena Bank.

  1. The merger is aimed at creating the country’s third largest bank only next to SBI and HDFC Bank.
  2. This forms a Government’s move in consolidation of banks and a big move in banking reforms.
  3. The board of the three banks should now meet and consider the proposal.
  4. Combined bank will have 34% of low cost deposits and a total turnover of over Rs. 14.82 lakh crore and a capital buffer of 12%.
  5. These three banks have been advised to meet and take a decision by the Finance Ministry.
  6. This is aimed to reduce the overall costs and handle customer issues in a better.
  7. Also these banks possibly would be cutting their branches which are near to each other.
  8. All the three banks are in the same core banking system which will make the merger process easier. Their brand equity of all the banks will be kept in tact.
  9. Merger would make rooms for lending to top companies and make the capital requirements simpler.

Challenges:

  1. Integration and rationalising people would be the primary task which appears to be difficult.
  2. Though the capital requirements would become simpler, the combined employee strength of these three entities would be 85,675 which should be taken into account.
  3. Other important challenge would be how these corporate focussed banked shift to the retail section using their network, especially Vijaya Bank and Dena Bank.

Author: Admin Bankedge

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