The fund infusion will be through preferential allotment of equity shares of the lender during FY 2018-19 as government’s fund infusion will help lender meet its credit and contingency needs.The new merger of Dena Bank, Vijaya Bank and BoB will start its operations from new Fiscal year that is 1st April.
Meanwhile, the Supreme Court of India while hearing a plea flied by the bank officers association refused to put immediate stay on merger of three banks. The apex court denied to put immediate stay on the merger of Public Sector lenders– Dena Bank, Vijaya Bank and Bank of Baroda (BoB).
The merged entity will have about 9,500 branches across India, with combined entity’s capital adequacy ratio at 12.25%, out of which tier 1 capital will be 9.32%. The merged entity will have Non Performing Assets (NPA) of about 5.71%.
Dena bank which is a weak Prompt Corrective action bank and its merger with Bob and Vijaya Bank can bring down the overall balance sheet below regulatory capital breach which seem to have prompted government to infuse fund.
The shares of BoB jumped about 7% on Thursday at closed at ₹129.60 on BSE.