Shares of Dena Bank declined over 5 per cent early Wednesday, weighed down by profit booking.
The scrip on Tuesday rallied nearly 20 per cent after the government said state-owned Bank of Baroda (BoB), Vijaya Bank and Dena Bank will be merged to create India's third-largest lender as part of efforts to revive credit and economic growth.Bank of Baroda was up 0.93 per cent at Rs 114.50 at around 9.55 am while Vijaya Bank rose 1.51 per cent to Rs 57.25.
Dena Bank was down 5 per cent at Rs 18.15.Bank unions have opposed the governments merger move, alleging that it's just a diversion from the main issue of NPAs and their recovery from big corporates, according to a report by PTI.All India Bank Officers' Confederation (AIBOC) said the central problem of the Indian banking industry is the enormous load of NPAs worth of over Rs 10 lakh crore, which have accumulated on account of "faulty lending practices and the absence of any strategy to recover the amounts from delinquent corporate houses".AIBEA General Secretary C H Venkatachalam said there is no evidence that the merger of banks would strengthen the banks or make them more efficient.
He said "no miracle happened" after the merger of five associate banks with SBI.The proposed merger will increase the business size of the merged entity to Rs 14 lakh crore, making it third-largest lender in the country after SBI and ICICI Bank.
Satish Kumar, Senior Research Analyst, Fundamental Research Desk, Choice Broking said, Financial position of Dena Bank is weak compared to BoB and Vijaya Bank and thus, after this announcement, we expect gain in Dena Banks share.
asset quality pain of Dena Bank can be easily absorbed by the merged entity.
However, the challenges will remain in terms of rationalisation of branches, lower costs and addressing employee concerns.