In the opening bell session, Dena Bank was the top gainer, going up over 7% to Rs.18.40. On the other hand, Vijaya Bank and Bank of Baroda, both are down in the red.

The sudden spike up in the stock price of Dena Bank can moist certainly not be attributed to its Q2FY19 earnings as its loss had widened and asset quality too had slipped. Clearly, the main trigger is the news about its merger.

Bank of Baroda has gone on record stating that it has set 30^th November as the record date for share swap for acquiring Dena Bank and Vijaya Bank. The share swap ratio is yet to be decided but should not be a bone of contention as the owner of all three banks is the same – Govt of India.

This is good news for Dena Bank, especially given the further deterioration in asset quality. Its loss for Q2 doubled to Rs.417 crore while Gross NPA rose to 23.64% v/s 22.69% (QoQ) and Net NPA too increased from 11.04% to 11.70%. On the other hand, BoB had a good run in Q2 with net profit rising 20% at Rs.425 crore and Net NPA coming down from 5.40% to 4.86% (QoQ).

Thus for Dena Bank it’s a win-win not so much for BoB or Vijaya Bank.