Mega PSB merger! Bank of Baroda shares tumble 14%; Vijaya Bank up 10%, Dena Bank soars 20%
Bank of Baroda, Vijaya Bank, Dena Bank merger would be the second big amalgamation exercise in the banking sector after the SBI associate banks with the SBI.
A new merger of public sector banks (PSBs) has been announced and this time it would merge the third largest state-owned Bank of Baroda with two smaller lenders of government that are entangled in horrific amounts of stressed assets namely, Vijay Bank and Dena Bank. The merger decision was announced yesterday evening. Now that investors have gotten to react on the decision of government in today’s trading session, looks like they were not much pleased in Bank of Baroda stock price, on the other hand, they showed all their love for Vijaya Bank and Dena Bank. This would be the second big merger in the banking sector after the that of SBI associate banks with the SBI.
On BSE, Bank of Baroda opened with an intraday low of Rs 116.5 per piece which took its stock price down by massive 13.76% in few minutes of trading session. However, at around 0926 hours, the stock price was trading at Rs 123.65 per piece down by Rs 11.45 or 8.48%.
Meanwhile, share price of Vijaya Bank opened by touching an intraday high of Rs 65.9 per piece rising by over 10.36%.
Going ahead, Dena Bank saw heavy buying in their stock price as it touched an upper circuit of Rs 19.10 per piece resulting in surge of nearly 19.75%.
Talking about the merger, Nilanjan Karfa and Harshit Toshniwal, Equity Analysts at Jefferies said, "The Finance Minister proposed the merger of BOB (Buy) - the base, VJYBK (NC) - the kicker and DBNK (NC) - the bad bank, to create the third largest bank by loans and second largest by deposits, with no definite timeline or merger ratio."
The duo added, "We don't think the merged entity comes off terribly worse off, at least on paper, though a smooth three-way merger is always a tall ask."
Financial Services Secretary Rajiv Kumar was quoted as saying by ANI on Monday,"We have decided to merge Dena Bank, Vijaya Bank and Bank of Baroda. The merger of the 3 banks will make this the third largest bank of the country."
The employees of the three banks should not worry about their career in the wake of the merger announced by the government, Finance Minister Arun Jaitley reiterated.
Government believes that the merger will lead to a substantial rise in customer base, market reach, operational efficiency, wilder bouquet of products and services for customers.
Get Latest Business News, Stock Market Updates and Videos; Check your tax outgo through Income Tax Calculator and save money through our Personal Finance coverage. Check Business Breaking News Live on Zee Business Twitter and Facebook. Subscribe on YouTube.
RECOMMENDED STORIES
Retirement Planning: SIP+SWP combination; Rs 15,000 monthly SIP for 25 years and then Rs 1,52,000 monthly income for 30 years
Top Gold ETF vs Top Large Cap Mutual Fund 10-year Return Calculator: Which has given higher return on Rs 11 lakh investment; see calculations
Retirement Calculator: 40 years of age, Rs 50,000 monthly expenses; what should be retirement corpus and monthly investment
SBI 444-day FD vs Union Bank of India 333-day FD: Know maturity amount on Rs 4 lakh and Rs 8 lakh investments for general and senior citizens
EPF vs SIP vs PPF Calculator: Rs 12,000 monthly investment for 30 years; which can create highest retirement corpus
Home loan EMI vs Mutual Fund SIP Calculator: Rs 70 lakh home loan EMI for 20 years or SIP equal to EMI for 10 years; which can be easier route to buy home; know maths
10:07 AM IST