STUDY ON THE AMALGAMATION OF

BANK OF BARODA, DENA BANK

AND VIJAYA BANK
Presenting to- Lt. Col. S N Prasad
GROUP A3
19042 - Ranjan Kulkarni
19045 - Sachit Srivastava
19050 - Shreyas C
19052 - Smriti S
19055 - Sumanth M
VIJAYA BANK, DENA BANK
BECAME BANK OF BARODA
 GOI proposed the merger on 17 September 2018 and finally approved by
Union Cabinet on 2 January 2019
 Vijaya Bank and Dena Bank was merged with Bank of Baroda on April 1
2019 to create the third-largest lender of the country
 According to the Scheme of Amalgamation, shareholders of Vijaya Bank will
get 402 equity shares of Bank of Baroda for every 1,000 shares held
 In the case of Dena Bank, its shareholders will get 110 shares of Bank of
Baroda for every 1,000 shares
CONTD.
 The number of PSBs will come down to 18. The consolidation will help to
create a strong globally competitive bank with economies of scale and enable
realisation of wide-range of synergies
 The merged entity have better financial strength, its net NPA ratio is 5.71 per
cent, significantly better than PSBs' average of 12.13 per cent
 The merger will lead to rise in customer base and market reach
 The merger saved Dena bank as it was barred from lending by RBI
PORTER’S FIVE FORCES
MODEL
 Competitive Rivalry- High competition from existing financial institutions
and better facilities to customers.
 Threat of New entrants- High capital requirement and the idea of merging
and creating a barrier has reduced the threat of new entrants
 Threat of substitutes- very little threat from substitutes in certain services.
 Bargaining Power of suppliers- The bargaining power of suppliers is medium
to high.
 Bargaining power of Buyers -The switching cost are high for customers but
Integration of IT has made it easy and reduced costs
SWOT ANALYSIS
Strength
India’s third largest lender
Diversified branch network
Weakness
Increased time period for IT
integration of branches
Merged with bank under
prompt corrective action

Opportunity Threat
IT integration will increase Competition from other PSB’s
growth and financial Institutions
Expansion to other Increase in investments by
economies foreign banks
 7’S FRAMEWORK
Strategy- The strategy involves setting up various innovative and customer centric
services.
Structure- The company has a hierarchical structure and also a flat structure
System- A set of systems to support the functioning of the bank like risk
management systems, control systems.
Staff- Well trained and highly motivated staff
Skills – skills are an integral part of their operations
Style- autocratic and democratic leadership style and power of 3
Shared values- Fundamental values followed throughout the organization
COMPETITIVE ADVANTAGE &
RELATED PROBLEMS
 Expected to become globally competitive with the synergies of the 3 banks and the advantage of the
low-cost deposits
 The merged entity will inherit many unique projects due to the ‘best in the industry’ reach in the
rural areas
 Improve the Balance sheet in the long run and provide benefits to all the stakeholders: Shareholders-
more earning; Customers-better service; Government- lower NPAs, Employees- less workload
 Technological integration is a challenge even when they all use Finacle but the versions are different
 The profitability of Bank of Baroda might fall due to the absorption of Dena Bank’s losses for a
short term.
 The NPA might be reduced, if not, it will impact BOB’s books and Shareholders’ earnings might
reduce.
STRATEGIC ASPECTS
 The move will lead to a lower NPA (non-performing assets) ratio
 It will be a strong competitive bank with economies of scale.

 More Branches- The merger will help in acquiring new branches and expand
geographically.
 It will help in improving the balance sheet as the losses of poor performing
bank can be absorbed by the well performing banks
 Increase the earnings of the shareholders.

 It will create synergies for network, low-cost deposits and subsidiaries.

FINDINGS AND
RECOMMENDATIONS
• The merged entity will become India’s 3rd largest lender and 2nd largest in terms
of deposits
• Bank unions collectively called for strikes against the merger
• Still integrating their systems and is predicted to be effective from Jan 2021
• Must safeguard the shareholders’ and employees’ interest
• Information of merger must be communicated to all its customers to avoid chaos
• The merged must create a single digital platform / point of contact
• Try to find a way for not changing the account numbers, IFSC etc.
• All the merged banks should be brought to the same version of Finacle to avoid
the delay and instability in software upgradation
• To integrate the updated technology from the effective date of merger operations
THANK YOU