Public sector banks (PSBs) named for merger by the government have formed teams at the level of general managers (GMs) to ease the process of integrating products and processes. Heads of the 10 PSBs on the merger list met in Mumbai on Wednesday to discuss initial plans.
The government plan was announced last Friday, to merge 10 PSBs into four. Punjab National Bank, Oriental Bank of Commerce, and United Bank of India will combine to form the nation's second-largest lender. Canara Bank and Syndicate Bank will merge; Union Bank of India will amalgamate with Andhra Bank and Corporation Bank; Indian Bank will merge with Allahabad Bank.
Rajkiran Rai, managing director and chief executive at Union Bank of India, said it was more of learning from Bank of Baroda’s experience in managing the merger of Vijaya Bank and Dena Bank with itself. State Bank of India also shared its takeaway from the integration of five associate banks.
The meeting was anchored by the Union ministry of finance. The focus of the interaction was more on processes. There are various statutory and legal ones involved in a merger. More senior-level professionals across the banks are getting involved in merger work, in areas like information technology (IT) and human resources, said two senior executives.
“We do not want the feeling of large banks taking over control of small banks to dominate the process. Best practices of various banks will be adopted to get business benefit for an organisation, post merger. The priority is minimal disruption to business and customers,” said bankers.
Banks are also weighing the option of hiring experts for help in specialised areas. "Some of us may rope in advisory and consultancy outfits to assist. The areas could be IT system integration or cultural and human resource management issues," an official said.
While there are similar products offered by the banks to be merged, there are some overlapping and some unique products. The merger exercise would need to cautiously merge the products, keeping in mind technological support, said the head of a PSB who attended the meeting.
Documentation in this regard would be an important component, he said.
As a next step, the banks to be merged, it was suggested, should form joint committees on various verticals, under an apex committee to oversee the process. For example, different committees with representatives from all the banks to be merged to work on different areas like risk management, products, technology or policy. Anchored by an apex committee for the merger, which is to have representatives from all the banks in question.
Also, while branch rationalisation would be on the cards, no voluntary retirement schemes. For, PSBs were already going very slow on recruitment over recent years, according to the chief of one of these.