This could cheer the bank employees protesting the government move to merge nationalized banks. Bank of Baroda has announced that it is issuing 15 crore shares to be issued to the employees of the bank, at a discount of 20%. It may be recalled that two smaller banks, Dena Bank and Vijaya Bank were merged with Bank of Baroda earlier this year, making it the third largest bank in the country (after SBI & PNB) with over 9,500 branches.
The allotment of shares to the employees by Bank of Baroda was decided at a meeting of the bankâ€™s Compensation Committee comprising members of the board of directors of the bank. Subject to final approvals, the employees will be permitted to buy their bankâ€™s shares under the Employee Share Purchase Scheme. The price of each share has been fixed at Rs 75.47 based on a market price of Rs 94.34 which has been arrived at by calculating the average high and low volume weighted prices of the stock over a fortnight ending September 4. There are 85,000 employees in all and the resolution by the committee says â€˜all eligible employeesâ€™. This may mean any contract or temporary employees may be left out.
Significantly, Bank of Barodaâ€™s results for the first quarter of this fiscal, ending June 2019, has been quite encouraging. The bank has posted profits of Rs 710 crore against Rs 49 crore loss that BoB suffered in the June 2018 quarter.
The government has announced further mergers of banks only last week, bringing down the count of state-owned banks to just 12. Will these merged entities too display similar trends? One has to wait and see.