Merger of banks: This is the best combination possible, says Vijaya Bank MD

The existing employees will not be affected by the merger, said d Vijaya Bank's Managing Director and Chief Executive Officer R A Sankara Narayanan

Bengaluru-based Vijaya Bank’s Managing Director and Chief Executive Officer R A Sankara Narayanan said these three banks were the best possible combination for an amalgamation. In an interview with Anup Roy, he said the existing employees will not be affected. Edited excerpts:

What is the ramification of this merger for the sector? Is it going to do any good for the industry and the three banks?

Definitely yes! There are various factors at play here. The combined entity gets presence, balance sheet size, brand equity, and it will have lower non-performing asset (NPA) ratio than the average. It will have better profitability, while capital is assured. We can also share our individual expertise in the new bank. For example, we have a strong retail credit, which adds value to the combined entity. The skill gaps would be addressed, sharing knowledge will develop operations.

Why do you think the government went with this combination?

Why not? Among 21 banks, this is the best combination available. We have the same core banking platform. Besides, the government being the owner can decide to combine any bank they want.

Vijaya Bank is decidedly a better bank in terms of ratios, but it is small. Do you think a well-run bank should not have been merged in such a manner?

We are not merging; it is an amalgamation. If you have seen the government presentation, we have been considered equal, there is no big or small. What matters is that the efficiency and performance of the new entity should be better than the sum of individual entities.

What can Vijaya Bank offer to the new entity?

Banking is the business of accepting deposits for the purpose of lending. But there are certain aspects that need focus, such as target on recovery, quality of balance sheet, improvement in CASA (current and savings account), better retail portfolio, and better profitability.

Often, when a large bank merges with a smaller entity then the smaller bank employees are treated roughly. Do you worry for your staff?

I am very confident that will not happen. You must have heard the briefing, where the major shareholder, the government, assured that will not happen.

How will senior management of three banks be accommodated in the merged entity?

That depends on the structure of the amalgamation.

Do you expect heavy branch rationaliation?

That depends on the business potential of the combined entity. That call will have to be taken after the three banks’ management sits together.

When is your board going to sit to discuss the proposal?

In about 10 days, we should be able to sit and decide.

There is a chance that you may not remain an MD & CEO. Are you apprehensive?

Absolutely not! After working for Bank of India and Vijaya Bank, I am ready to take any challenge that comes my way.