Bank of Baroda becomes 8th bank to approve stock split this year

Mumbai: Bank of Baroda on Monday said its board has approved a stock split wherein one existing equity share will be split into five, subject to regulatory approvals. With this, it is now the eighth bank this year to take the route to make its stock more affordable to smaller shareholders.

In its filing to BSE, Bank of Baroda said that in a meeting held on 27 September, the board had considered and given its in-principle approval to the bank for the sub-division of one existing equity share of face value of Rs.10 each fully paid up into five equity shares of face value of Rs.2 each fully paid up.

Stock splits are usually carried out to make the company’s shares more affordable to retail shareholders, thereby widening the shareholder base, which in turn boosts the liquidity for these stocks. They are usually announced when a company’s stock price reaches a certain price level, which makes it expensive for smaller shareholders to buy them. The move does not change anything fundamentally for the stock. So far this year, 75 companies have announced stock splits. A total of 79 companies had opted for a stock split in 2013.

On 24 September, State Bank of India’s (SBI’s) board too approved a 10-for-1 stock split, the first by the country’s largest lender.

SBI said it will exchange 10 shares for each share held and will also arrange to mirror the reduction in face value of the equity shares in its existing GDRs (global depository receipts).

Earlier this month, ICICI Bank Ltd had also approved a five-for-one stock split, again the first by the second-largest lender in the country. Axis Bank Ltd, Punjab National Bank, Canara Bank Ltd, Corporation Bank and Jammu and Kashmir Bank Ltd have also approved stock splits.