No VRS After Merger, Bank Of Baroda May Have To Hire More, Says CEO Jayakumar
Bank of Baroda won’t introduce VRS for employees looking to exit after merger with state-run peers, says MD and CEO PS Jayakumar.
Bank of Baroda Ltd. won’t introduce any voluntary retirement scheme for employees looking to exit after its merger with state-run peers Vijaya Bank Ltd. and Dena Bank Ltd., according to the head of India’s third-largest lender.
The usual attrition rate at Bank of Baroda is close to 3.25 percent, PS Jayakumar, managing director and chief executive officer at the bank, said in an interview with BloombergQuint. Combining that with the number of employees entering the bank after the merger, and removing those who might be retiring soon, he said the lender may have to hire more people.
“Bank of Baroda will end up being a job creator, rather than rationalising its work force. Just that the new hires will be in more specialised segments like customer relationships, branches and analytics,” he said. “These hires will be less from the conventional entrance exam route.”
The merged entity will have an advances base of Rs 6.6 lakh crore and a deposit base of Rs 8.7 lakh crore, making it the second-largest public sector lender after State Bank of India and No. 3 among all banks. It will have just under 10,000 branches and more than 84,000 employees.
Jayakumar said the three-bank merger, which became effective on April 1, would result in significant synergies for employees and customers. Bank of Baroda is looking to finish all the necessary groundwork within 12-18 months, he said.
“We have already harmonised the compensation structures and hierarchies for employees up to the general manager level. We will be going below that now. By May this year, customers can start seeing common products across all three banks. We still have to ensure that the technology is on the same platform and that the branding of all banks is common,” Jayakumar said.
The combined entity, he said, has about 900-950 branches that are overlapping. Bank of Baroda might consider relocating some of those to nearby locations where it does not have any presence. “There will be some shutdowns, but that will mostly be in due course of business. It would not necessarily be related to this amalgamation.”
Bank of Baroda recently received Rs 5,000-crore capital infusion from the government, which will help in supporting growth in the near term for the combined entity. The bank will also look to raise funds to support long-term growth.
As India’s third-largest state-run lender, Bank of Baroda will keep assessing opportunities to grow its corporate loan book. But it has not been pressured into supporting any infrastructure project that might impact its risk profile, Jayakumar said.
“Our retail loan portfolio will probably grow faster than any other loan book for now. We want to first stabilise the NPA-related issues first,” he said. “Once that is more stable, we can look for chunky exposures that we can fund. But there are probably more organisations that are more capable of funding such projects.”