Bank Merger List Contains All Your Favourite PSU Banks

Call it the government’s effort to strengthen the functioning of PSU banks or the inability of smaller units to function on its own, the Narendra Modi-led current dispensation has moved on its plans of merging the banks as announced a year back. The government recently gave an approval to the merger of the Mumbai-headquartered Bank of Baroda (BoB) with smaller PSU banks - Vijaya Bank and Dena Bank. This bank merger list is set to bring a whole lot of change in terms of balance sheet, employee headcount, both on a combined and individual basis. So, if you want to be detailed on the same, the article is for you.

A Detail on the Likely Business of the Merged Entity

The combined business of the merged entity is estimated to be ₹14,82,325 Cr, with BoB likely to rake in a maximum of the three with ₹10,29,810 Cr, followed by Vijaya Bank and Dena Bank with ₹2,79,575 and ₹1,72,940, respectively. The gross advances of BoB, Vijaya and Dena Bank are likely to stand at ₹4,48,330 Cr, ₹1,22,350 Cr and ₹69,220 Cr, respectively, taking the total to ₹6,40,600 Cr. On the other hand, the merger would keep the deposits of BoB at ₹5,81,485, Vijaya at ₹1,57,325 and Dena at ₹1,03,020.

How Would Merger Change the Branch Dynamics?

While the Bank of Baroda would have 5,502 branches, Vijaya Bank and Dena Bank are likely to have 2130 and 1858 branches, respectively. Of the branches, BoB would have 81 advance and 106 deposit branches. Whereas, Vijaya Bank is likely to account for 57 advance and 74 deposit branches. Dena Bank, compared to the other two, would get 38 advance and 55 deposit branches to handle. It is estimated that around 56,360 BoB employees would be taking stock of its branches. Vijaya Bank and Dena Bank would have 15,875 and 13,440 employees, respectively.

What Shape Would Other Business Indicators Take Post Merger?

Although the return on advances of the merged entity is likely to be on the red with -0.02%, BoB and Vijaya bank’s return  would still be in green with 0.29% and 0.32%, respectively. It’s Dena Bank which has to contend with -2.43% return. The CRAR Capital ratio of BoB, Vijaya Bank and Dena Bank is estimated to be 12.13%, 13.91% and 10%, respectively. The same for the merged entity is forecast at 12.25%. The CET-1 Capital Ratio of BoB, Vijaya Bank and Dena Bank is most likely stand at 9.27%, 10.35% and 8.15%, respectively, with 9.32% for the combined entity. Dena Bank would have to bear the burden of NPA the most with 11.04%, followed by BoB and Vijaya at 5.40% and 4.10%, respectively. On the other hand, CASA ratio of 35.52% (BoB). 24.91% (Vijaya Bank) and 39.80% (Dena Bank) would be the case post the merger.

The government is planning to merge Punjab National Bank (PNB) with Oriental Bank of Commerce (OBC), Allahabad Bank, Indian Bank and Corporation Bank. Plans are in place to combine Canara Bank with UCO Bank, Syndicate Bank and Indian Overseas Bank. While Union Bank of India would most likely take over IDBI and Central Bank of India, Bank of India would have Bank of Maharashtra and Andhra Bank under its control.