The proposal to merge Bank of Baroda with smaller rivals Vijaya Bank and Dena Bank has been sent for government approval after securing go-ahead from the boards of the three banks, PTI reported quoting a banking official.
Bank of Baroda managing director and CEO PS Jayakumar was quoted by the news agency as saying: “The boards of all the three banks have approved (the merger proposal) and sent the recommendations to the government. We are in early stages of rolling this out.
“The next step would be the government approving formally the merger process, and then the swap ratio.”
He added that the deal, which would be carried out through a share-swap, would take around four to six months to close. The deal was first announced last month.
The merger is the first three-way consolidation of banks in the country. It is expected to create the third largest bank in the country with a combined business of around $204bn.
It is also expected to result in wide-ranging synergies including stronger market presence and product portfolio.
Most of the state-owned banks in India are currently struggling with growing non-performing assets (NPAs) figures. The merger is one of the steps planned by the government to revitalise the sector.
If successful, the three-way merger will reduce the number of state-run lenders to 19.