(FE)
Synergies and financial burden, mainly stressed assets, will be the key commercial considerations for the amalgamation of public-sector banks (PSBs), an official source told FE. There won’t be a one-size-fits-all approach to such mergers, he asserted. While the government has said the mergers will be based on commercial terms, factors such as human resource transition, geographical reach, regional balance and cultural ethos would also be considered because they have ramifications beyond just operational levels and influence a bank’s financial decisions, said the official.
“Any factor — operational or financial — that influences a bank’s commercial decision will have to be taken into account,” said the source. The boards of potential candidates for consolidation will look into all such issues and come up with a proposal that reflects financial viability of the merged entity in the longer term, added the source. At least four banks — Canara Bank, Syndicate Bank, Dena Bank and Vijaya Bank — have given presentations before senior financial ministry officials on their takes on consolidation. At 17.37%, Dena Bank’s gross non-performing assets are the worst of these four, while Vijaya Bank’s are the best (7.3%).
