RA Narayanan also spoke about the future course of action after the merger.
RA Sankara Narayanan is managing director and chief excecutive officer of Vijaya Bank. He has taken over the reigns of the bank from Kishore Sansi, who reached superannuation on August 31, 2018. Narayanan said the swap ratio for the proposed merger of Vijaya Bank with Bank of Baroda (BoB) was decided through fair and transparent process. Narayanan said the bank did not expect any issues with regards to the valuation or swap ratios.
In an exclusive interview to CNBC-TV18, Narayanan also spoke about the future course of action after the merger.
Watch the video here:
What is the reaction to the swap ratio itself, was it well received in the bank, any shareholders wrote to you?
We are waiting. The swap ratio is 402 shares of Bank of Baroda for every 1,000 shares of Vijaya Bank. Number one, We have a fair and transparent way of independent valuations. Number two, fairness has been certified. Third, the grievances, if any, will be addressed by a committee. I do not see any issues on the valuations or the swap ratio as of now.
Just a quick question in terms of rationalisation of operations, do you expect some layoffs post this entire amalgamation that will take place?
Not necessarily because we are running totally combined around 9,500 branches. Bank of Baroda has branches across India. So there will not be much rationalisation or reduction in branch premises as of now.
What would the total deposits look like for the combined entity? Will it become bigger than ICICI Bank?
The combined business will be more than Rs 16.5 lakh crore; that will be the total business. I am sure there is good potential to grow and we shall be the second biggest public sector bank and third compared with all the banks operating in India.
What are the steps that have already been taken? Have you taken steps in terms of who heads the bank, and how will be the fitment in terms of designations and ranks?
As far as the operations are concerned, it is the staff from clerical to general manager level, they will all be fitted according to their date of joining, seniority, promotions, and all that. There will not be any issues as far as the regular offices of the bank is concerned. When it comes to management, it is a decision taken by the government from time-to-time and people effortlessly move from one bank to another.
So the organisation and the sector of this will be decided by the finance ministry at appropriate time and we have no issues at all on that.
You have no hint on – is it that Jayakumar (BoB, MD) will continue to head the amalgamated entity, what will your role be, no hint has been given by the shareholders?
Appropriate decision will be made by Department of Financial Services (DFS) and I think once the amalgamation takes place, definitely they will be thinking of proper roles for other MDs and EDs also, it should not be an issue.
When is the amalgamated entity going to trade as one share and when will you change the name and put up common sign boards for all?
April 1 will be the date for amalgamation. So the name boards cannot be changed overnight so there will be a group or member of BoB in all the 9,500 outlets and of course, the decision on logo and other things also has to be made and repainted. So it may take another six-nine months for the entire name board synchronisation, logo synchronisation. The staff deployment can happen maximum before September this year.
So as of now, there is no decision or homework done on how many branches maybe duplicated?
Not many. Maximum 200-300 branches may have duplication but depending on the potential and the business in that particular area, the decision can be taken.
Are you all ready to integrate your treasury right away?
On April 1, you can have an integrated treasury, your software is talking to each other?
The individual banks will declare the balance sheet on March 31. Whatever the integration is, it is from April 1 and for that too you require some regulatory approvals. Once it comes, everything will be formalised.
Just a couple of questions on the new rules that have kicked in for MSMEs, what is your exposure to medium and small enterprises with loans under Rs 25 crore?
The NPA or the performance of SME is much better in Vijaya Bank compared to many other banks. Our default ratio is somewhere 5-7 percent in that segment whereas industrywise it is around 15 percent. There are not many accounts as far as Vijaya Bank is concerned but we will selectively do the restructuring whatever prescriptions given by RBI. We will also follow it up. Overall the credit portfolio in Vijaya Bank is very sound.
What is the amount, do you have the number?
I don’t have the number. Our results are on January 21.
Are any of those in SMA? How many of the under Rs 25 crore are in SMA-I or SMA-II?
Our portfolio is under SMA. It is insignificant as far as the value in Vijaya Bank is concerned.
As of March 31, you are going to submit a standalone P&L (profit and loss). What will be the highlights of that P&L, are you expecting to maintain that 20 percent odd loan growth, are you expecting your net interest margin (NIM) around 3 percent?
It is. Even for December as well as March, we are confident, we will maintain it including NPAs around below 6 percent as far as gross and below 4 percent.
Are your provision coverage ratios as good as BoB’s or will you have to increase it?
We are somewhere around 63 percent. As far as the valuation is concerned, it has been valued at whatever RBI’s valuations are concerned.
We understand that many bankers have written to RBI asking for a bit of relaxation on several issues like for instance a standstill on IL&FS, that one day default should be changed to 60-day default or recognition only after 60-days, are you aware of this letter, were you signatory?
Nothing specific from the bank has been given.Source: CNBC TV 18Get access to India's fastest growing financial subscriptions service Moneycontrol Pro for as little as Rs 599 for first year. Use the code "GETPRO". Moneycontrol Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the Moneycontrol website or mobile app.