The Cabinet Committee of Economic Affairs approved the merger of Dena Bank and Vijaya Bank with Bank of Baroda on Wednesday. It is the first ever three-way merger of banks in India.

The amalgamation will be the first-ever three-way consolidation of banks in India, with the amalgamated bank being India's second largest public sector bank," said the government in a release. The merger was proposed in the month of September last year. If you are a customer, employee or shareholder of any of these three banks, you should be aware of the changes that will take place.

The merger will be effective from 1 April 2019. Post-merger, Bank of Baroda will become the third biggest public sector bank in India after State Bank of India (SBI) and ICICI Bank. It will also bring down the total number of PSU banks to 18. The combined business of these banks is expected to be Rs 14.82 lakh crore. The amalgamation scheme will be laid before the Parliament for 30 days for the perusal of the members.

Employees

• All employees of Vijaya Bank and Dena Bank will be absorbed by Bank of Baroda and there will be no retrenchment.
• The working conditions will remain the same.
• "The board of the transferee bank shall ensure that the interests of all transferring employees and officers of the transferor bank are protected," the release said.

Shareholders

• Shareholders of Dena Bank will get 110 shares of Bank of Baroda for every 1,000 shares held.
• Shareholders of Vijaya Bank will get 402 equity shares of BoB for every 1,000 shares held.
• The share swap will hurt shareholders of Dena Bank more than Vijaya Bank as they will lose Rs 4.80 and Rs 3 per share respectively. The calculations are based on the closing prices of the shares on Wednesday, that is Rs 17.95 and Rs 51.05 respectively.
• The government owns 68.77 percent in Vijaya Bank, 80.74 percent in Dena Bank and 63.74 percent in Bank of Baroda. Foreign portfolio investors (FPIs) held 1.29 percent in Dena Bank, 4.91 percent in Vijaya Bank and 10.35 percent in BoB. The government will own 65.74 percent in the merged entity after it is complete.
• Investors' disappointment with the share swap, share prices of Vijaya Bank and Dena Bank fell sharply on Thursday morning.

Customers

• Dena Bank, that is currently under PCA (prompt corrective action) framework of the RBI will start functioning as a regular bank from 1 April.
• You will not lose your money as an account holder, but your bank account in Dena Bank or Vijaya Bank will become Bank of Baroda account.
• There will be changes in IFSC codes, debit or card cards and passbooks. All of these will be provided to you for free.
• The rate of interest on your savings account deposits might change and this will be dually informed to you.
• Nothing much will change except the name of your bank and the branch location. Some branches may be shut down if two are close to each other. The regional offices may also change.