The government on Thursday extended the term of P S Jayakumar as the managing director and chief executive officer of Bank of Baroda by another year till October 12, 2019. His three-year term was to end on Friday.
The extension is being seen as an important move aimed at steering the proposed merger of Bank of Baroda (BoB), Vijaya Bank and Dena Bank. The boards of the three public sector banks have already given the nod for the merger proposal.
Ashvin Parekh, managing partner at Ashvin Parekh Advisory Services, said one year will go in piloting the scheme of amalgamation. Ideally, three years are necessary to oversee a healthy integration and realise value from amalgamation.
The merger is expected to take about four-six months and the share swap ratio will be decided soon. BoB is in the process of appointing accountancy firms to provide independent valuation for the proposed amalgamation.
Soon after the government’s announcement on September 18, Jayakumar had allayed fears on job losses due to the merger. “A large number of employees are retiring. That is a serious issue, so do not think employees have to worry about (job) redundancies. Employees should keep doing what they are doing,” he said.
While spearheading organic growth for BoB, Jayakumar will face challenges while managing the merger. Rating agency Fitch in a report said confrontational trade unions pose the most significant immediate challenge and that integrating cultures will be an important issue over the long term.
Addressing the issue of overlapping branches and offices of the three banks will also engage the top management’s attention. Cost benefits could accrue over the medium term through rationalisation. The operations of Dena and Vijaya could also become more efficient, as they are integrated into Bank of Baroda’s systems and processes.
Prior to taking up the assignment as MD and the CEO of the bank in 2015, he was the co-founder and CEO of VBHC Value Budget Housing (VBHC), a company engaged in housing for low and moderate income household. He has seen a career banker since 1986 and spent over 23 years in Citibank in India and Singapore.