Shares of Bank of Baroda tumbled 16 per cent, while Dena Bank surged up to 20 per cent on Tuesday following the merger announcement. The scrip of Bank of Baroda dived 16.03 per cent to end at Rs 113.45 on BSE. Shares of Vijaya Bank plunged 5.69 per cent to close at Rs 56.40. Bank of Baroda’s market valuation fell by Rs 5,726.62 crore to Rs 30,013.38 crore on BSE. Vijaya Bank lost Rs 442.61 crore to Rs 7,355.39 crore in market capitalisation. On the other hand, shares of Dena Bank jumped 19.75 per cent to end at Rs 19.10 — its highest trading permissible limit for the day. “The proposed merger between the three banks — Bank of Baroda, Vijaya Bank and Dena Bank is a step in the right direction to sustain the competitiveness of the public sector banks. “Given the increasing size and growing market share of the Indian private sector banks, such a merger and the consequent economies and synergies will strengthen the competitiveness of PSBs as a whole,” said Suman Chowdhury, President - Ratings, Acuite Ratings & Research Limited. The government Monday said state-owned Bank of Baroda, Vijaya Bank and Dena Bank will be merged to create the country’s third largest lender as part of efforts to revive credit and economic growth. The move follows top lender State Bank of India last year merging with itself five of its subsidiary banks and taking over Bharatiya Mahila Bank, catapulting it to be among top 50 global lenders. Post this merger, the number of PSU banks will come down to 19.<doc-sep>Union finance minsiter Arun Jaitley on Monday announced the proposed merger of Vijaya Bank and Dena Bank with Bank of Baroda. Assuring that the amalgmation will benefit all the parties involved, the finnace minister also informed that the Reserve Bank of India was also consulted regarding the merger. If it happens, the entity after the merger of the Vijaya Bank, Dena Bank and Bank of Baroda will create the third largest bank in India. It will also be directly competing the largest bank SBI in state of Gujarat. But what it means for the employees of these banks and how will it impact the customers? Regarding the employees, the finance minister repeatedly assured that the staff will not be impacted negatively. However, the employees do not share the same thoughts. Below we have listed out 10 points regarding the much-talked about merger. 1. The merger is expected to create India’s third largest bank, having a total business of around Rs 14.8 lakh crore. It will have gross advances of Rs 6.4 lakh crore and deposits of Rs 8.4 lakh crore. 2. FM has ensured that employees’ interest would be protected, but the government will have to look at a lean and mean structure, going forward. 3. The merger of Bank of Baroda (BoB), Dena Bank and Vijaya Bank will create the largest banking entity in Gujarat, and will challenge the market leader State Bank of India (SBI) in the state 4. BoB has the second largest banking network in Gujarat, just below market leader SBI, while Dena Bank has the third largest network in Gujarat. 5. Vijaya Bank, among the only two lenders to have reported a profit in 2017-18, has a strong credit culture. 6. Customers of the three state-run banks are set to benefit from the proposed amalgamation of Dena Bank and Vijaya Bank, two relatively small banks, with Bank of Baroda (BOB). 7. Customers of Dena Bank and Vijaya Bank will get to be a part of a larger and a wider banking network. 8. The merger process will also consolidate the non-performing assets of the three banks at Rs 80,000 crore, resolutions of which may be put on the back burner as the banks will have to tackle issues related to the amalgamation. 9. Moody's Investors Service Tuesday said the plan to merge Bank of Baroda, Vijaya Bank and Dena Bank will be credit positive as it would improve their efficiency and governance. 10. Meanwhile, finance minister Arun Jaitley is likely to meet the bank chiefs on September 25 to review the performance of the public sector banks (PSBs).<doc-sep>NEW DELHI: The markets on Tuesday, reacted sharply to the government's plan of merging three state-owned lenders -- Bank of Baroda, Dena Bank and Vijaya Bank.Bank of Baroda, the bank with the strongest fundamentals among the three, saw its stock plunging. At 10.30 am, the stock was down 12 per cent at Rs 119 on the NSE. In contrast, Dena Bank -- the weakest of the lot -- made huge gains in early trade and was up almost 20 per cent at Rs 19.05. The Vijaya Bank stock was also in the green, gaining nearly a per cent.Overall, the Nifty PSU Bank sub-index did not give a thumbs up to the government's plan, as the gauge was losing more than 2.50 per cent in mid-day trade. The broader market in comparison, was in the red, but trading fairly flat.The government believes that the merger will improve the operational synergy of the three banks and is part of a plan to create larger Indian lenders nstead of smaller entities vying for the same business.<doc-sep>Bank of Baroda Ltd, India's second-largest state-run bank by market capitalisation, fell as much as 14.2 percent on Tuesday after the government's decision to merge it with Dena Bank and Vijaya Bank failed to enthuse investors. The Centre plans to merge Bank of Baroda, Dena and Vijaya Bank, the financial services secretary said on Monday, as part of efforts to tackle a pile of bad loans plaguing the banking sector and revive credit growth. Brokerages were, however, not very hopeful about the prospects for Bank of Baroda. Deutsche Bank analysts downgraded the stock to "hold" from "buy", cutting its price target to 145 rupees from 180 rupees. DB analysts see the bank's shareholders facing challenges such as likely dilution in focus of the bank's management towards the merger and away from growth. Shareholders of Vijaya Bank and Dena Bank may be given some premium at the cost of Bank of Baroda shareholders, they added. While Bank of Baroda saw its steepest fall in over three years, shares of Dena Bank and Vijaya Bank rose sharply as the smaller peers are expected to benefit from the merger. Dena Bank shares were locked in the upper circuit at 19.9 percent in the first half hour of trading. Over 1.7 million shares changed hands, ahead of their 30-day average volume of 1.5 million shares. The merger is a positive step towards the consolidation of state-run banks, and synergies from the merger will result in operational efficiencies and better customer service, CIMB analysts wrote in a note. Positive sentiment also helped other state-run banks, with UCO Bank up 7.5 percent and Indian Overseas Bank up 10.6 percent. Still, heavyweight Bank of Baroda dragged the Nifty PSU bank index as it dropped as much as 2.4 percent to its lowest since July 26.<doc-sep>
Bank merger: Analysts had mixed views about the plan to merge the three state-run banks. Bank of Baroda shares fell over 16 per cent in Tuesday's trade after the government announced its merger with smaller peers Dena Bank and Vijaya Bank. Bank of Baroda shares closed at Rs 113.45, down Rs 21.65 or 16.03 per cent on the Bombay Stock Exchange (BSE). Dena Bank shares were locked in an upper circuit as they gained 19.75 per cent or Rs 3.15 to Rs 19.10. After trading mildly higher earlier in the day, Vijaya Bank shares ended at Rs 56.40, down Rs 3.40 or 5.69 per cent on the BSE. The government plans to merge Bank of Baroda, Dena Bank and Vijaya Bank as part of efforts to tackle a pile of bad loans plaguing the banking sector. The three banks will create the third largest bank in the country. Analysts, however, had mixed views about the plan to merge the three state-run banks. "The plan lacks solidity unless there is a serious quantification of capital impairment. With BOB forming the biggest chunk of the business (two-third), this scheme appears to create some headwinds for the bank," said Dhananjay Sinha, head of research, economist and strategist, Emkay Global Financial Services. Credit ratings agency Moody's said the government's plan "will be credit positive as it will provide efficiencies of scale and help improve the quality of corporate governance for the banks". Bank of Baroda and Vijaya Bank have relatively better credit metrics than Dena Bank in terms of asset quality, capitalisation and profitability, it noted. Bank of Baroda shares saw their steepest fall in over three years, according to a report by news agency Reuters. Deutsche Bank analysts downgraded the stock of Bank of Baroda to "hold" from "buy", cutting its price target to Rs 145 from Rs 180. The Nifty PSU Bank - the index of state-run banks on the NSE- tanked 2.65 per cent and was the biggest sectoral loser as all its twelve stocks declined in trade. The Nifty50 traded at 11,340.45, down 37.30 points or 0.33 per cent and the S&P BSE Sensex was at 37,496.33, with a loss of 89.18 points or 0.24 per cent. (With Reuters inputs)