After their merger with Bank of Baroda, Dena Bank and Vijaya Bank will be excluded from various NSE indices. The two state-owned banks will be replaced by Corporation Bank and CreditAccess Grameen in Nifty 500, Nifty Smallcap 250 and Nifty MidSmallcap 400 indices. “The Index Maintenance Sub-Committee has decided to replace Dena Bank and Vijaya Bank from various indices on account of the scheme of arrangement for amalgamation," the NSE said in a press release.
Shares of Dena Bank and Vijaya Bank plunged during the Thursday morning trading hours as investors were disappointed with the merger share swap ratio with Bank of Baroda (BoB). The ratio is seen at a steep discount. Intraday, Dena Bank shares fell as much as 19.8% to hit a low of Rs 14.40 a share, while Vijaya Bank dropped as much as 7.4% to touch a low of Rs 47.25 a share. BoB stock gained over 3% to Rs 123.
The cabinet approved the three-way merger of Dena Bank and Vijaya Bank with Bank of Baroda (BoB) on Tuesday to create India’s third largest banking entity by assets. As per the share swap ratio announced, shareholders of Vijaya Bank and Dena Bank will get 402 and 110 equity shares of BoB respectively, for every 1,000 shares held. A Mint analysis of the ratio shows that the Dena Bank shareholders will lose Rs 4.80 per share while Vijaya Bank shareholders will lose Rs 3 per share. The calculations are based on the closing market price on Wednesday.