The Union government on January 2 approved the merger of Dena Bank and Vijaya Bank with Bank of Baroda (BoB).
With the merger, BoB will become the country’s third largest bank after State Bank of India and ICICI Bank.
“There will be no impact on the service conditions of the employees and there will be no retrenchment following the merger,” Union Law Minister Ravi Shankar Prasad told reporters about the decisions taken by the Union Cabinet.
The merger had been designed to make BoB as a merged entity, a globally competitive lender, Mr. Prasad said.
The Bank of Baroda board approved a share exchange ratio under the merger subject to regulatory approvals. As part of the merger, Bank of Baroda will issue 402 shares of Rs. 2 each for every 1,000 Vijaya Bank shares of Rs. 10 each, and 110 shares of Rs. 2 each for every 1,000 Dena Bank shares of Rs. 10 each.
At present, 21 state-run banks in the country - holding two-thirds of assets in the sector - account for the bulk of the record $150-billion of soured loans last year.