On 10 September, the government proposed to merge the three state-owned banks. The merged entity, comprising two relatively stronger banks and a weak one, will be the third largest lender in India, after State Bank of India (SBI) and HDFC Bank Ltd, with total business of ₹14.82 trillion.

EY was appointed to conduct the financial and tax due diligence of all three banks. Separately, these banks will carry out independent valuations. Vijaya Bank has appointed M.M. Nissim and Co., Bank of Baroda has named Deloitte, and Dena Bank has appointed SMSR and Co. LLP.

Once finalized, the share swap ratio will be subject to the approvals of the respective boards, Reserve Bank of India and the Parliament.

The banks have also appointed McKinsey to chart the business plan for the combined entity over the next 5 years, said Narayanan. Under the plan, the entity expects to achieve 0.8% return on assets and 12% return on equity once the business stabilises, he added.

While the total staff strength will be retained at 85,000, a total of 200 branches will be shut, to leave a network of 9,500 branches. The managing directors are likely to retain their positions in the new entity.

“This will be an amalgamation at par and the seniority levels will be maintained,” said Narayanan. “There will be 3 managing directors with an executive chairman at the helm, which is similar to the SBI structure.”

Besides Narayanan, Karnam Sekar, who was earlier with the State Bank of India, was recently appointed MD and CEO of Dena Bank. P.S. Jayakumar is head of Bank of Baroda.

Mint had on 24 October reported that the three banks have already set up internal panels, including committees on credit, human resources and information technology. These committees will comprise CEOs and executive directors of the three banks, to help integrate the functions of the banks.

Although the three banks use the Finacle core banking solution developed by Infosys Ltd, they have different versions of the software. While Dena Bank and Vijaya Bank are on Finacle 7.2, Bank of Baroda had recently upgraded to Finacle 10.2.