New Delhi: Shares of Dena Bank surged up to 20%, while Bank of Baroda tumbled nearly 14% on Tuesday following the merger announcement.

The scrip of Dena Bank zoomed 19.75% to Rs 19.10 - its highest trading permissible limit for the day - on BSE.

On the other hand, shares of Bank of Baroda dived 13.76% to Rs 116.50 and Vijaya Bank lost 2.59% to Rs 58.25.

The government on Monday said state-owned Bank of Baroda, Vijaya Bank and Dena Bank will be merged to create the country's third-largest lender as part of efforts to revive credit and economic growth.

Also read: Govt to merge Vijaya, Dena, Bank of Baroda; form India’s 3rd largest bank

The move follows top lender State Bank of India last year merging with itself five of its subsidiary banks and taking over Bharatiya Mahila Bank, catapulting it to be among top 50 global lenders.

Post this merger, the number of PSU banks will come down to 19.