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The amalgamation process has successfully drawn on the strengths of each of the 3 banks: BoB MD

Author: Kumar Shankar Roy/Wednesday, April 10, 2019/Categories: The Finapolis Conversation

The amalgamation process has successfully drawn on the strengths of each of the 3 banks: BoB MD

Bank of Baroda has become the 2nd largest public sector bank on the strength of ‘Power of 3’, as a result of the first three-way consolidation of banks in India. The combined bank, which includes Vijaya Bank and Dena Bank, has 9,500+ branches, 13,400+ ATMs, 85,000+ employees serving 120 million+ customers with a business mix of over Rs 15 lakh crore. P.S. Jayakumar, MD and CEO, Bank of Baroda, who joined in October 2015, is steering the mega lender’s comprehensive transformation journey currently underway across all aspects. In an interview with Kumar Shankar Roy, Jayakumar talks about the roadmap for the amalgamated entity one year down the line, and what benefits will accrue to customers, employees, and stakeholders. Read on to know more.

What has led to the amalgamation of Vijaya Bank, Dena Bank with Bank of Baroda?

Indian banking sector is undergoing a transformative phase with a number of steps being taken by the Government of India and the regulators to bring about efficiency and transparency in the banking system with an aim to have a robust financial system. One of the steps initiated by the government in this regard is the consolidation of the Indian banking system to reduce the number of public sector banks.

As a part of the above initiative, the Government of India vide its notification dated January 2, 2019 notified the Scheme of Amalgamation of Vijaya Bank and Dena Bank with Bank of Baroda. The amalgamation has taken effect from April 1, 2019. This is a three-way amalgamation of nationalised banks, first of its time which has been completed seamlessly in a record period of time since the boards of three banks gave their ‘in-principle’ approval in end of September 2018.

The combined entity will create a pan-India universal financial services conglomerate, dominating key economic clusters and leveraging cutting edge technology & operations platforms, serving customers in India and globally with Bank of Baroda’s international presence. The amalgamated entity will contribute significantly to the economic development of the nation, bringing financial inclusion to the masses, while delivering significant returns to shareholders and funding growth through internal accruals. It is good for the nation, customers, and all stakeholders.

What is vision and roadmap for the amalgamated entity one year down the line?

Through this amalgamation, the vision is to create an institution of global scale and size, thereby providing significant benefit to all stakeholders. The amalgamation will witness a strengthening in the customer base, facilitating national and global outreach for Bank of Baroda and enabling the combined entity to compete at the global level. The amalgamated bank will be the second largest public sector bank in the country. The combined entity will have a 22 per cent market share in Gujarat and 8-10 per cent market share in other key states viz. Maharashtra, Karnataka, Rajasthan and Uttar Pradesh. 

The complementarity in branch presence will add to the network in western and southern states and the presence will extend from the Northeast to the West Coast and from Srinagar to Kanyakumari. The amalgamated entity will have a wider geographical reach with 9,500+ branches, 13400+ ATMs, 85,000+ employees serving 120 million+ customers, and having assets of Rs 10 lakh crore+ with deposits and advances of Rs 8.75 lakh crore+, and Rs 6.25 lakh crore+, respectively. We plan to build upon their strengths, leverage the synergies of the three institutions and scale up our operations by deepening relations with our wide customer base.

What does the amalgamation mean for the customers of the three banks?

The three amalgamating banks, each of whom has a rich past legacy of serving the society and nation for over 80 to 110 years, come with its own share of strengths and niche relationships. All of these are being pooled together to build a modern, world-class, and new-age banking institution that simultaneously provides continued stability, a significantly enhanced proposition, and a delightful experience to our valued customers.

The amalgamation process has successfully drawn on the strengths of each of the banks so that the combined bank together has an expanded set of capabilities and reach to serve our customers with best-in-class products and services. Vijaya Bank and Dena Bank customers will continue to get the banking services with the same account number, passbook, cheque book, ATM/Debit/Credit Card/internet, and mobile banking application till further communication. Further, the customers will continue to avail the services with their existing branch and branch network of their respective banks.

A direct benefit of amalgamation for Vijaya Bank and Dena Bank customers would be to avail benefits of a diverse bouquet of products and services like financial planning services and wealth management, cash management, supply chain financing, multi-currency funding, etc. besides enhanced points of interface provided by the amalgamated bank. Additionally, Dena Bank customers will now be able to meet their credit needs at the amalgamated bank which will not have any lending restrictions. As for Bank of Baroda customers, the only change that our customers will experience is an enhanced experience with additional touch points, expanded distribution network and stronger supply chain.

Overall, customers would see improvement in the quality of services with the introduction of many new technology led processes like tab banking and mobility solutions; 24 X 7 X 365 days back offices operations and service center based at GIFT city in Gandhinagar, Gujarat. NRI Customers of all the banks will now have access to a larger network and the erstwhile customers of Dena and Vijaya will have access to Bank of Baroda’s international presence with 101 overseas branches.

As a consequence of the increase in capital of the amalgamated bank and additional capital infusion of Rs 5,042 crore by the Government of India, the bank will be in a position to have deeper banking relationships with the ability to provide an enhanced level of credit facilities to our customers. The Analytics Center of Excellence will enable cross-sell and thereby providing a wider array of offering to our customers.

What does the amalgamation mean for employees and other stakeholders of three banks?

The amalgamated entity will have a total employee base of 85,000+ and all employees across the three banks have been retained. The employees will have more opportunities and brighter professional prospects in a larger bank having significantly expanded size, scale and geographic footprints. The international network of branches will enable wider section of employees to have global exposure.

Since employees form the very foundation of the combined bank, we will also like to reiterate that the service conditions of employees will not be impacted and the interests of all employees will be protected. The best HR practices adopted by each of the banks will be examined for adoption in the amalgamated entity.

The role of our employees in completing the amalgamation process in record time in a seamless manner cannot be overstated. We continue to remain committed to defining a culture that fosters meritocracy, transparency and fairness for all. We thank R.A. Sankara Narayan and Karnam Sekarto for setting the framework for the seamless and frictionless transition to the amalgamated bank. 

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Kumar Shankar Roy
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