Union Bank is open to consolidation: Varghese

Mumbai, March 30 | Updated: Mar 31 2006, 05:30am hrs
State-owned Union Bank of Indias outgoing chief Cherian Varghese has said that the bank is opened to consolidation proposals.

We are prepared for the consolidation but we have not received any formal proposals from any other entities during my stint in the bank he said to FE.

Mr Varghese denied the fact that there was any merger proposal between Union Bank of India and Bank of India.

The consolidation has its merits wherein the resources can be utilised optimally. However there is a need for the national consensus among the all the stake holders-political parties, employees of the bank.

It must be recollected that Union Bank is rumoured to have merger proposals from Bank of India and IDBI Ltd.

However, there was no confirmation available to this development and ministry of finance also did not push through the consolidation processes in the banking industry due to lack political consensus.

Emphasising the fact that consolidation in the banking industry will have to be driven by the boards of the banks, ministry of finance (MoF) had said that no directive on the issue of consolidation has been issued either by the Centre or Reserve Bank of India.

The MoF has asked the banks to continue and deepen the dialogue with employees and officers to obtain consensus in favour of consolidation.

According to MoF the board of the banks have to take decision in this regard about synergy levels of merging/ consolidation entities.

The union finance minister P Chidambaram in his meetings with chief executive officers of the state-owned banks had asked them to accelerate the process of consolidation in the banking sector.

The MoF has asked the banks to continue and deepen the dialogue with employees and officers to obtain consensus in favour of consolidation .

The Indian Banks Association had recommended that the government should consider proposals for consolidation between nationalised banks in order to strengthen them.