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BoB shares rise by 2 percent after govt promises Rs 5,042-cr infusion

PW Bureau

Through a notification on Wednesday, the Ministry of Finance had conveyed its decision to BoB, the bank said in a regulatory filing New Delhi: Shares of Bank of Baroda (BoB) surged nearly 2 percent in the early hours of Thursday morning trade after the government announced its decision to pour Rs 5,042 crores into the bank ahead of the merger of Dena Bank and Vijaya Bank with itself. The merger is going to take effect from March 1. Through a notification on Wednesday, the Ministry of Finance had conveyed its decision to BoB, the bank said in a regulatory filing. "The capital infusion will be by way of preferential allotment of equity shares (special securities/bonds) of the bank during 2018-19, as government's investment," it said. As per the Scheme of Amalgamation, shareholders of Vijaya Bank will receive 402 shares of BoB for every 1,000 shares held. The shareholders of Dena Bank, on the other hand, will get 110 shares for every 1,000 of BoB.

BoB likely to raise Rs 6,800 crores via bond sale

BoB is looking to raise approximately Rs 6,800 crores (US$1 billion) via sale of bonds overseas to strengthen its capital position before credit demand swells. The bond sale will be called Regulation S in market parlance, where bonds are offered to investors outside the United States. The sale is expected to open before the end of the current financial year. Fitch Ratings has assigned BoB's proposed senior unsecured notes a rating of 'BBB-(EXP),' it had said in a statement released earlier this week. In the past six months, BoB shares have risen by more than 16 percent as the bank's asset quality has improved over time.