Anchor Banks To Take Board Approval For Merger In 7-10 Days
Anchor banks with which smaller PSBs would be merged will seek approval from their boards in about 10 days, says Canara Bank CEO.
Anchor banks with which smaller public sector banks would be merged will seek approval from their boards in about 10 days, Canara Bank Chief Executive Officer RA Sankara Narayanan told BloombergQuint.
Once all approvals for the merger are received from the government, business integration of Canara Bank and Syndicate Bank is expected by April 1, 2020, Narayanan said. The government’s decision to infuse Rs 6,500 core in Canara Bank will alleviate the need for a plan to raise a similar amount from the market, he said.
Sunil Mehta, chief executive officer of Punjab National Bank, another anchor bank which will takeover Oriental Bank of Commerce and United Bank of India, said the government has considered minimum regulatory and growth requirement of banks before calculating capital infusion in state-owned banks. The merger will bring a lot of synergies for the amalgamated entities, he told BloombergQuint.
Good systems and processes of Oriental Bank of Commerce, and plans to optimise infrastructure and resources for overlapping geographical presence will help in improving profitability of PNB, Mehta said, adding that the large current and savings account base of United Bank of India, and its reach in east and north east India will help the amalgamated entity in serving more customers.
No Cultural Difference After Merger, Says Canara Bank
Read the full transcript of the conversation with Canara Bank’s RA Sankara Narayanan
You were a part of the previous consolidation exercise that the government had undertaken. How beneficial do you think is this consolidation of Canara Bank and Syndicate bank?
Both are Karnataka-based and that is the number one advantage. Culturally, there won’t be any difference at all. There are 10,300 branches and 15 lakh crore-plus business mix. It will definitely add value. It will be the fourth largest PSB after the State Bank of India, Punjab National Bank, and Bank of Baroda. Plus, the government is also giving us capital which will also give us better opportunities to do quality business with better consortium arrangements and controls.
When is the bank expected to take this proposal before the board? Since this proposal has come from the government and not banks mulling among themselves, does this mean that banks have lesser power?
Not at all... They’ve applied their wisdom and mind before coming into conclusions not only on size but also on the IT and infrastructure. They want stronger banks across India, and fortunately, Canara Bank has its presence across India and not necessarily in the south. In the next seven-10 days time we will definitely be going to the board. It is a simple process. I am sure board will be too glad to encourage such initiatives. We think that once we get the approvals from the government and the gazette notifications, the actual integrations may happen some time in April 2020 as it had happened in the Bank of Baroda -Dena Bank- Vijaya Bank combination.
The government announced capital infusion of Rs 6,000 crore. Will it be helpful?
This is very helpful. We had plans to raise similar capital from market. Now, the government is giving it so that makes our job much easier and we can concentrate on core activity of quality business and integration process.
Will there be any HR issues? The governance reforms for PSBs where boards have been given additional powers.
There will absolutely no HR issues. Most of PSBs have proper governance. We are reiterating here and definitely the points will be well noted, deliberated and implemented in all the bank boards.
Catch the conversation with Canara Bank’s RA Sankara Narayanan here:
Don’t Foresee Human Resource Issues, Says PNB
Read the full transcript of the conversation with PNB’s Sunil Mehta.
How beneficial do you think will the merger be, and what the synergies you think will be there?
One thing I can tell you is that this particular merger is going to be beneficial for the entire banking system and the country as a whole. The three bank merger will bring lot of synergies in the amalgamated entity because Oriental Bank of Commerce has got good systems and processes. We have overlapping geographical presence where we can optimise utilisation of our infrastructure as well as resources and improve profitability. United Bank of India has a lot of strength, a large CASA base and especially they have a presence in east and northeast India. So the bank will be able to serve a lot of new customers and existing customers on a pan India basis. This will bring in a lot of convenience for the customers.
When will the three banks take the proposal to their respective boards?
This will be deliberated in the boards of the three banks and accordingly a decision will be taken and we’ll let you know once the decision is taken.
Do you think the capital infusion amount will be enough?
Yes, all the requirements of the bank, including the minimum regulatory requirement and growth requirement have been computed while working out the capital infusion. This will be really beneficial for economic growth.
The series of governance reforms, how beneficial will they be?
Empowering boards of public sector banks will definitely improve their corporate governance and independence in decision making.
We’ve seen four mergers today. Do you see any HR issues due to it?
I do not foresee any HR issues. It will be a win-win situation because employees of each bank will get the better of the three.
Watch the interview with PNB’s Sunil Mehta here: