BOB Vijaya Bank Dena Bank Merger Effects

In a Surprising and unprecedented move Government announced merger of Bank of Baroda, Vijaya Bank and Dena Bank yesterday after years of consultation and planning. Though the merger of Indian banks were being discussed for a long time, no government actually did it.

Effects of Merger in Short Term

For a short period of time say 3 months to 9 months things will look clumsy. The total attention of these banks will be towards merger. Issues will be raised by Trade Unions, who wiill certainly oppose the move fearing job loss. Customer Services might be effected for a time period. New Stationary will have to be substituted with old ones. For a period of upto 9 months there might be some confusion but seeing SBI merger, things look not that bad.

Effects of Merger in Long Term

In long term, effects of merger will minimize and things will be well in place. Merger will help to build a stronger bank and avoid unnecessary competition. Customer Services will be improved.

Effect of Merger on Existing staff

It is almost clear that existing Staff of the Banks will get a chance to take VRS (Voluntary Retirement Scheme) from the Bank before it actually heads for merger. Taking Ideas from merger of SBI group as many as 20% of the staff of erstwhile banks opted for VRS. Total Staff of Vijaya Bank and Dena bank is around 30000 employees. After Amalgamation total employees in the Bank of Baroda Group will be around 89,000. Of this we expect around 14000 employees going for VRS scheme and another 20000 retiring in a period of 3 years. On paper we cannot see a major effect of the merger on existing staff of the bank as salaries across PSB’s is same. Only effect which could come will be in the terms of posting. There will be transfers of staff across India keeping in view customer service.

Effect of Merger on New Jobs

As mentioned above that around 35000 employees will go out of fray, It will be a golden period for jobs. Currently most of the banks are under PCA guidelines of RBI, after merger it is expected that PCA framework will be relaxed on the bank given a stronger bank. Bank is expected to go heavily for new hiring. We see Banking jobs increasing in 2019-20, 2020-21.

Effect of Merger on NPA’s

In Total 3 banks carry 80000 crores of NPA of which around 30000 cr is up for settlement under bankrupcy Law. In long term, it will help in curbing NPA’s because all banks on date are struggling with inadequate work force and morals of staff members are low. Merger will add a new zeal among staff members and would help in fighting NPA’s in a better term. Though for a short term, the problem of NPA’s will aggrevate due to the merger.

Good Days of Banking Sector may be near

BOB, Dena Bank, Vijaya Bank Merger

sehpaathi