All banks on equal footing in amalgamation plan: Sunil Mehta, MD & CEO, PNB

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Published: September 13, 2019 2:02:36 AM

The government, under the decisions taken under the alternative mechanism, has announced in-principle approval for the merger process of 10 banks in which PNB is one of the anchor banks.

amalgamation plan, Sunil Mehta, PNB, Punjab National Bank, annual general meeting, Indian Banks’ AssociationSunil Mehta, MD & CEO, PNB.

Punjab National Bank (PNB) and the two banks it is going to acquire have formed 23 working groups to resolve issues around products, processes and human resources, PNB MD and CEO Sunil Mehta said on the sidelines of the Indian Banks’ Association’s (IBA) 72nd annual general meeting. The amalgamation will allow the creation of robust new verticals, such as marketing, within public-sector banks, he added. Edited excerpts:

What is the progress made in the merger of PNB with the two other banks?

The government, under the decisions taken under the alternative mechanism, has announced in-principle approval for the merger process of 10 banks in which PNB is one of the anchor banks. These issues are being deliberated by the respective boards of the three banks. In my bank, we have already taken in-principle approval and are working out a detailed amalgamation plan. This is an amalgamation plan and not a merger plan and in this plan all the three banks are on equal footing.

What kind of synergies are you hoping to benefit from?

Even employees are going to gain out of it because the best of the facilities available in each of these banks will be made available to all in the amalgamated entity. Another advantage is that there will not be any retrenchment of staff and there will be a lot of synergies between them. For instance, OBC has got good systems and processes and have got overlapping presence with PNB so we can optimise our resources. So, these synergies will definitely benefit the amalgamated entity.

What timeline are you looking at to complete the process?

The timelines will be finalised by the board members when the detailed merger plan is worked out. This is not only a legal merger but has to be in terms of technology, product and services and we have already created 23 working groups, including products, processes and human resources. These have participants from three banks and each will work on various products of the three banks to merge the best features of these products and make a common one. So, the day this amalgamated entity comes into force, the unified product is available to all stakeholders.

How are you placed in terms of capital?

You must appreciate that we have got the largest chunk of capital support of Rs 16,000 crore for PNB and Rs 1,600 crore for United Bank of India. For the amalgamated entity it works out to be Rs 17,600 crore and with that we will meet out the regulatory and growth requirement of the amalgamated entity. Our plans to sell our non-core assets are on track.

How will you manage the HR transition? Will there be a VRS offer?

For HR, we have already made two things clear and FM has already announced that there is not going to be any retrenchment and every employee is going to gain because the best of the benefits will be available to them. Suppose, United Bank is giving better benefits to their employees, then the same will be available to all in the amalgamated entity.

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