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September 23, 2017

Vijaya Bank & Dena Bank enter merger talks

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In early signs of the government’s ambitious plan for consolidation among state-run lenders to help them gain efficiency and scale, small size, state-owned lenders Dena Bank and Vijaya Bank have initiated talks for a possible merger. A possible merger between the two relatively smaller Public Sector Banks (PSBs) will lead to formation of a large midsized bank.

Earlier last month, the Union Cabinet had given an in-principle approval for alternative mechanism for PSU banks merger. The public sector banks' boards will themselves decide the final contours of the proposed amalgamation, and will then seek approval from the GoM (Group of Ministers).

The proposed merger between Vijaya Bank and Dena Bank is being considered based on both the lenders complimenting each other on their geographical reach, as Vijaya Bank has strong presence in southern India, while Dena Bank is well-positioned in Maharashtra and neighbouring states.

Government of India holds 68.56% stake in Dena Bank and 70.33% stake in Vijaya Bank (as on 30 June 2017). If the talks are successful and the proposals get government's nod, the merger could be completed by end of this fiscal.

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