What BoB merger means for 85,600 workers

KOLKATA: Voluntary retirement may become a way of life for many as part of the proposed merger scheme between three state-owned banks -- Bank of Baroda, Dena Bank and Vijaya Bank.Although Union finance minister Arun Jaitley promised that employees of these banks will be protected, but banking experts said there would be areas of overlaps and flabs post-merger which the new management of the amalgamated bank would need to look into.“Given the larger presence of BoB and Dena Bank in Gujarat, there would be overlap of branches and ATMs, so there could be gains from rationalization,” said Lalitabh Shrivastawa, an analyst with Sharekhan by BNP Paribas.If the merger of State Bank of India and its associates is any precedence, then voluntary retirement scheme is most likely to be the part of the amalgamation process. About 4,000 employees at SBI and associate banks had opted for VRS.Bank of Baroda, Dena Bank and Vijaya Bank have about 85,600 employees between them.“We don't think the merged entity comes off terribly worse off, at least on paper, though a smooth three-way merger is always a tall ask,” said Jefferies India in its research note on bank.The government said a scheme of amalgamation will be formed and laid before the Parliament. While it will be interesting to see whether VRS becomes a reality, but senior employees of the merging banks have started anticipating such a prospect.“The situation in today’s banking is vicious. No one’s willing to take any business decision in fear of going wrong and getting punished. I would be happy to take VRS if it comes my way,” a banker in his mid-50s with Bank of Baroda told ET, requesting anonymity.The proposed merger has created a psychological divide between seniors and juniors as well: while younger employees see the possibility of working in bigger bank as a better career opportunity, seniors have become somewhat apprehensive.The government on Monday said that employees would be protected and they would get the best package prevailed among the three banks.HDFC Securities termed the merger move as one more step towards public sector bank reforms, but highlighted the challenges of employee and union issues, branch rationalization and capital.Shares of Bank of Baroda plummeted 16% on Tuesday to Rs 113.45, and lost Rs 5700 crore of its market capitalization, while Vijaya Bank shares fell 5.69% to Rs 56.40 on the BSE.Dena Bank stocks, on the other hand, rose 19.75% to 19.10. Nifty PSU bank index fell by 5.5%, impacted by the fall in all major banks shares in fear of further consolidation which would perhaps mean that they will have to absorb their weak siblings.

from Economic Times https://ift.tt/2phFi1N