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SBI and BoB not excited on move to consolidate state banks

Internal unification, recovering bad loans are priorities for these lenders

Public sector banks State Bank of India (SBI) and Bank of Baroda (BoB) are not at all excited by the government's push for consolidation in the public sector banking space, where, according to the government, there are too many players. For these banks, resolving the stressed assets for recoveries and capital generation are priorities for now.

The government has been pushing for consolidation of public sector banks (PSBs) to merge small and weak banks with large ones. The idea is to bring the number of PSBs down to six or seven strong players.

The stock markets also reacted negatively to the consolidation move. On Tuesday, the BoB stock fell 4.6 per cent to Rs 141 a share, while SBI was down 2.5 per cent to Rs 183.6 apiece and the Canara Bank scrip closed 2.34 per cent down at Rs 179 a share on the BSE.

Finance Minister Arun Jaitley had recently told reporters on the sidelines of the Gyan Sangam that an expert panel would be set up shortly to devise a strategy for consolidation of PSBs.

SBI, the country's largest lender, is more keen on integrating its associate banks such as State Bank of Mysore and State Bank of Patiala. Therefore, for SBI, merging any PSBs outside its fold is a remote possibility. SBI has already merged State Bank of Saurashtra and State Bank of Indore with itself.

SBI Chairman Arundhati Bhattacharya recently told a business channel that SBI was already a large bank and integrating associate banks would create another big bank. So, it would not like to take any other PSB into its fold.

P B Jayakumar, managing director and chief executive officer of BoB, said consolidation should not be seen negatively as the objective of consolidation was to build world-class banks.

For the bank, its near-term priorities are to recover non-performing loans using all available legal means and to build capital.

Ananda Bhaumik, chief analytical officer and managing director of India Ratings, said it would be negative for the acquiring bank as there would be write-downs involved.

Concurring with his view, Vibha Batra, vice president and head financial sector rating at ICRA, said consolidation was not the answer for asset quality challenge and capital.

According to her, at the moment, none of the PSBs has surplus capital to absorb any weak bank.



NOT AN ENTHUSIASTIC LOT
  • Public sector banks State Bank of India (SBI) and Bank of Baroda (BoB) are not at all excited by the government's move for consolidation in the public sector banking space, where, according to the government, there are too many players
     
  • For these banks, resolving the stressed assets for recoveries and capital generation are priorities for now

image
Business Standard
177 22
Business Standard

SBI and BoB not excited on move to consolidate state banks

Internal unification, recovering bad loans are priorities for these lenders

BS Reporter  |  Mumbai 



SBI and BoB not excited on move to consolidate state banks

Public sector banks State Bank of India (SBI) and Bank of Baroda (BoB) are not at all excited by the government's push for consolidation in the public sector banking space, where, according to the government, there are too many players. For these banks, resolving the stressed assets for recoveries and capital generation are priorities for now.

The government has been pushing for consolidation of public sector banks (PSBs) to merge small and weak banks with large ones. The idea is to bring the number of PSBs down to six or seven strong players.



The stock markets also reacted negatively to the consolidation move. On Tuesday, the BoB stock fell 4.6 per cent to Rs 141 a share, while SBI was down 2.5 per cent to Rs 183.6 apiece and the Canara Bank scrip closed 2.34 per cent down at Rs 179 a share on the BSE.

Finance Minister Arun Jaitley had recently told reporters on the sidelines of the Gyan Sangam that an expert panel would be set up shortly to devise a strategy for consolidation of PSBs.

SBI, the country's largest lender, is more keen on integrating its associate banks such as State Bank of Mysore and State Bank of Patiala. Therefore, for SBI, merging any PSBs outside its fold is a remote possibility. SBI has already merged State Bank of Saurashtra and State Bank of Indore with itself.

SBI Chairman Arundhati Bhattacharya recently told a business channel that SBI was already a large bank and integrating associate banks would create another big bank. So, it would not like to take any other PSB into its fold.

P B Jayakumar, managing director and chief executive officer of BoB, said consolidation should not be seen negatively as the objective of consolidation was to build world-class banks.

For the bank, its near-term priorities are to recover non-performing loans using all available legal means and to build capital.

Ananda Bhaumik, chief analytical officer and managing director of India Ratings, said it would be negative for the acquiring bank as there would be write-downs involved.

Concurring with his view, Vibha Batra, vice president and head financial sector rating at ICRA, said consolidation was not the answer for asset quality challenge and capital.

According to her, at the moment, none of the PSBs has surplus capital to absorb any weak bank.


NOT AN ENTHUSIASTIC LOT
  • Public sector banks State Bank of India (SBI) and Bank of Baroda (BoB) are not at all excited by the government's move for consolidation in the public sector banking space, where, according to the government, there are too many players
     
  • For these banks, resolving the stressed assets for recoveries and capital generation are priorities for now

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SBI and BoB not excited on move to consolidate state banks

Internal unification, recovering bad loans are priorities for these lenders

Internal unification, recovering bad loans are priorities for these lenders Public sector banks State Bank of India (SBI) and Bank of Baroda (BoB) are not at all excited by the government's push for consolidation in the public sector banking space, where, according to the government, there are too many players. For these banks, resolving the stressed assets for recoveries and capital generation are priorities for now.

The government has been pushing for consolidation of public sector banks (PSBs) to merge small and weak banks with large ones. The idea is to bring the number of PSBs down to six or seven strong players.

The stock markets also reacted negatively to the consolidation move. On Tuesday, the BoB stock fell 4.6 per cent to Rs 141 a share, while SBI was down 2.5 per cent to Rs 183.6 apiece and the Canara Bank scrip closed 2.34 per cent down at Rs 179 a share on the BSE.

Finance Minister Arun Jaitley had recently told reporters on the sidelines of the Gyan Sangam that an expert panel would be set up shortly to devise a strategy for consolidation of PSBs.

SBI, the country's largest lender, is more keen on integrating its associate banks such as State Bank of Mysore and State Bank of Patiala. Therefore, for SBI, merging any PSBs outside its fold is a remote possibility. SBI has already merged State Bank of Saurashtra and State Bank of Indore with itself.

SBI Chairman Arundhati Bhattacharya recently told a business channel that SBI was already a large bank and integrating associate banks would create another big bank. So, it would not like to take any other PSB into its fold.

P B Jayakumar, managing director and chief executive officer of BoB, said consolidation should not be seen negatively as the objective of consolidation was to build world-class banks.

For the bank, its near-term priorities are to recover non-performing loans using all available legal means and to build capital.

Ananda Bhaumik, chief analytical officer and managing director of India Ratings, said it would be negative for the acquiring bank as there would be write-downs involved.

Concurring with his view, Vibha Batra, vice president and head financial sector rating at ICRA, said consolidation was not the answer for asset quality challenge and capital.

According to her, at the moment, none of the PSBs has surplus capital to absorb any weak bank.


NOT AN ENTHUSIASTIC LOT
  • Public sector banks State Bank of India (SBI) and Bank of Baroda (BoB) are not at all excited by the government's move for consolidation in the public sector banking space, where, according to the government, there are too many players
     
  • For these banks, resolving the stressed assets for recoveries and capital generation are priorities for now
image
Business Standard
177 22

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