Shares of state-run Bank of Baroda fell as much as 14.2 per cent to Rs 116.1, their biggest daily percentage fall since January 2015, on merger announcement.
On the other hand, Dena Bank stock hit the upper circuit level. The shares rallied as much as 19.8 per cent to Rs 19.05. The stock posted biggest daily percentage gain since January 2008. Vijaya Bank jumped as much as 10 per cent to Rs 66, highest since January.
The Government had on Monday announced a proposal to amalgamate three public sector banks — Bank of Baroda, Vijaya Bank and Dena Bank. With a combined business of approximately Rs 15 lakh crore, the new entity will be the third-largest bank in India after State Bank of India and ICICI Bank.
Jefferies analysts “don't think the merged entity comes off terribly worse off, at least on paper, though a smooth three-way merger is always a tall ask”.
Deutsche Bank has cut the price target to Rs 145 from Rs 180, and has has given the rating to “hold” from “buy”. DB analysts expect the merger exercise to take 6-12 months to complete.