BoB-Dena-Vijaya merger credit positive, will improve governance: Moody's

The rating agency, however, expects that the merged entity will require capital support from the government, otherwise, such a merger would not improve their capitalisation profile

Global ratings agency Moody's on Tuesday said that the plan to amalgamate three public sector banks (PSBs) - Bank of Baroda (BoB), Vijaya Bank and Dena Bank - is credit positive as it will give benefit of scale and better governance.

The Government of India’s (Baa2 stable) plan to merge three public sector banks will provide efficiencies of scale and help improve the quality of corporate governance said Alka Anbarasu, Vice President, Financial Institutions Group, Moody’s Investors Service.

The merged entity will have a market share of about 6.8 per cent by loans – according to data as of March