Merger of BoB, Vijaya Bank, Dena Bank to give a fillip to lending capacity

But swap ratio should not be biased against stronger banks, say experts

The merger of Bank of Baroda (BoB), Vijaya Bank (Vijaya) and Dena Bank (Dena) will result in several benefits to the merged entity in terms of cost efficiency and ease of operation. 

On a cumulative basis, the adjusted capital (book value minus net non-performing assets or NPAs) of the amalgamated bank will be strengthened, increasing its lending capacity.

For instance, on a standalone basis, Dena’s net NPAs are 11 per cent of its advances as of June 2018 and capital adequacy ratio is 10.6 per cent. The deal improves this with net NPAs of the amalgamated bank standing at 5.7 per cent