Bank of Baroda (BoB), the combined entity after its merger with Vijaya Bank and Dena Bank, aspires to have a market share of 10 per cent against a current aggregate market share of 6.5 per cent, P S Jayakumar, MD and CEO of BoB, said on Monday.
Other metrics of success that the new merged entity has set include a 15 per cent compound annual growth rate and a return of assets close to 15 per cent.
The merger came into effect on Monday to create India’s third-largest lender after State Bank of India and HDFC Bank. Jayakumar believes successful amalgamation could come about when employees and customers identify themselves as part of BoB, which could take up to three years.
In a bid to accommodate more than 85,000 employees within the merged entity, and given the sheer size of the organisation, the bank would entail further changes to BoB’s pre-merger structure, which includes moving from being a three-tier entity.
However, Jayakumar does not deny the need for branch rationalisation, indicating, “There will be no closures, but there will be relocation. However, if there are closures, they would have happened regardless of this amalgamation. Sometimes, we make a wrong decision and we have to close it, this happens all the time … We will probably have 10-—12 per cent of the branches that you could say we would not need them.”
“However, the fact is also true that in many markets, which are sizeble, Bank of Baroda doesn’t have a presence,” he added
Despite the amalgamation, Jayakumar does not see any reduction in jobs though he does not rule out natural retirements, which could be roughly 3.5 per cent of the population.
He refused to commit to a number on how the merger aids the bank with cost savings, though he expects to come back with a revised strategy that would show that results are better than the sum of its parts by May-end.
In terms of asset quality, the net non-performing asset (NPA) figure for the combined entity stands at Rs 30,000 crore or 4.8 per cent of total advances, while BoB’s NPA alone stood at around Rs 18,000 crore. However, Jayakumar believes the bank is reaching the end of the NPA cycle and entering a more robust recovery cycle, indicating a good FY20 and FY21. —FE