Mumbai: Public sector lender Dena Bank has initiated the process of selling some of its real estate assets, including properties housing its branches, worth ₹ 462 crore. The move comes months after the government decided to merge Dena with Bank of Baroda and Vijaya Bank .

Dena bank has listed 14 properties, including six branches in Mumbai, and issued a request for proposal to appoint a legal consultant for the sale. The other properties include residential apartments in prime locations in Mumbai, New Delhi and Hyderabad. A 31 March 2016 valuation report cited by the bank, pegs the aggregate value of these properties at ₹ 462 crore. Mint has seen a copy of the RFP.

“The bank would like to engage the service of a legal consultant from a reputed law firm on the panel of Dena Bank to undertake the legal due diligence and vetting of bid document, sale deed, transfer deed, for sale of certain properties in Mumbai, New Delhi and Hyderabad," the document said.

Dena Bank has 1,872 branches and over 27 million customers.

Dena Bank CEO Karnam Sekar said over the phone that the bank plans to sell and lease back these properties, but the branches will not be shut down. “This will save a lot of costs for us and the money that comes through the sale will add to our capital." He added the sale is part of Dena Bank’s non-core asset divestment plan.

The law firm, Dena Bank said, will be responsible for perusing title documents and revenue records of the properties and responding to objections received, if any, after publication of public notices.

Mint had on 30 November reported that the merged entity will retain only one of the head offices of the three banks. The merged bank will neither retain all the regional offices, and employees working at those locations will be transferred.

As part of the bank merger process, a central steering committee, comprising the CEOs and executive directors of the three banks, has been formed. Fourteen functional groups, comprising general managers, have also been constituted. The functional groups include human resources, information technology, stressed assets, corporate advances and retail advances.

In September, the government had decided to merge the three state-owned banks—Bank of Baroda, Dena Bank and Vijaya Bank—in a move to reduce the amount of capital it needs to pump into these lenders. 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 and HDFC Bank. The bank merger will take 4-6 months to complete, BoB CEO P.S. Jayakumar had said on 17 September.

This is the third major restructuring in the public sector banking space undertaken by this government. The first was the merger of the five associate banks of SBI with itself.

The SBI bank merger had resulted in a sharp jump in the combined entity’s bad loans portfolio, crimping its profit. The associate banks reported losses of ₹ 5,792 crore for the March quarter of FY17 and ₹ 10,243 crore for the entire year. This resulted in the consolidated net profit of SBI declining to ₹ 241 crore, while the stand-alone net profit was at ₹ 10,484 crore.

The other major change is the proposed offloading of the central government’s majority stake in IDBI Bank.

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