With the banking sector already staring at a huge manpower crunch, the new banking licences will set the stage for large scale poaching over the next few years, say bankers and industry experts.
In their quest to scale up quickly, the new entrants will look to poach employees from rival banks atleast in the initial years of business.
Analysts say this will not be unprecedented. In 1994, when then DMD of SBI took over as the head of UTI Bank, a large number of SBI staff moved with him. In more recent times, the new age private banks like YES Bank have absorbed several officials from rivals such as HDFC Bank to scale up operations.
A September 2012 report by management consultancy Boston Consulting Group (BCG) notes the banking industry will need to hire a massive 9-11 lakh employees over the next five years. With many fresh graduates underqualified to take banking roles, manpower shortages could worsen. According to RBI data, banks added 42,000 jobs in 2011-12 taking the total number of people employed directly in banks to over 10 lakh.
Public sector bankers acknowledge their banks could be the main poaching grounds for the new entrants as they are handicapped by relatively lower salary levels and irritants like frequent transfers. The new entrants could potentially attract these employees through sops like better compensation and ESOPs.
Already plagued by growing retirements, public sector banks could see an exodus of people particularly at the junior to mid-level positions. ?It would be more cost efficient for banks to poach people with some banking experience rather than recruiting and training freshers,? said a senior State Bank of India (SBI) official.
According a 2010 report by the government-constituted Khandelwal committee on human resource (HR) policies in public sector banks, over 22,000 employees will retire in 2012-13. This number is expected to go up to around 30,000 in 2014-15. With experienced bank professionals leaving and new recruits not fully prepared to take over, a serious vacuum in middle and top management is on the cards.
The Khandelwal committee report said that by 2015, around 80% of general managers, 65% of deputy general managers, 58% assistant general managers and 44% of chief managers would retire.
Private sector banks, on other hand, will be targeted at the mid-senior level positions as they will be vital in devising strategies to build the fee-based banking side of the business. Bankers say as it will be difficult to compete with incumbent players on traditional banking, the new entrants may dedicate more resources towards modern banking and services.
For the top management positions, all existing banks, including multinational bank officials with deep industry contacts and expertise will be potential targets. ?The older senior executives who are close to their retirement age could be a good target for new banks as they have a lot of experience,? said Uday Shankar Roy, former deputy MD of SBI.
Shinjini Kumar, director, banking regulations, PwC India, said there is a possibility that top executives from other sectors like telecom and FMCG could also be in line for top roles with the new banks.
Kumar added the churn in the industry will significantly vary depending on the companies that are given licences and their respective business models. ?If a financial service company is given licence, they already have people on the retail side they will not require to hire new workforce for this. But if a corporate house like RIL gets licence, it will require a specialised workforce from the sector,? added Kumar.
Bankers say that some of the new entrants could focus on a wholesale deposit and corporate lending led approach like what was adopted by Axis Bank and YES Bank in their earlier days. Others could focus on niche areas like infrastructure or vehicle financing owing to their expertise as an NBFC.