Merger of 3 banks face employee opposition

New Delhi: The declared merger of Bank of Baroda, Dena Bank and Vijaya Bank is likely to face stiff challenge and resistance by trade unions.

The merger proposal has unsettled the trade unions that have expressed their displeasure. Employees unions have already come out with disapproval and argue that mergers have not proven to be as beneficial as made out to be, to banking performance in experience.

"There is no evidence the merger of banks would strengthen or make them more efficient. We have seen the example of 5 Associate Banks merging with SBI. No miracle has happened. On the other hand, it has resulted in a closure of branches, an increase in bad loans, reduction of staff, reduction in business, " said CH Venkatachalam, General Secretary, All India Bank Employees' Association (AIBEA).

While SBI merger did not see any specific job losses, around 3,500 employees took up a sweetened voluntary retirement scheme (VRS) and the bank has not been filling seats post retirements that took place over the last year. However, the lender continues to recruit probationary officers through the government-organised entrance test.

If the proposed merger of the three banks fructifies, total employee strength will be 85,675, with 56,361 employees of BoB, 15,874 of Vijaya Bank and 13,440 employees of Dena Bank.

Finance Minister Arun Jaitley, however, assured there will be no job losses stating employees of relatively small banks will get an opportunity to improve their working conditions and the amalgamated entity will increase the banking operations. "The healthy ratios of amalgamated banks is reflected in a larger business base, strong deposits, large global network, significant outreach," Jaitley added.

Vishwas Utagi, General Secretary Maharashtra State Bank Employees Federation and Vice President All India Bank Employees Association, said, "bank mergers at this juncture have not come as a surprise, but it's a very unfortunate knee-jerk reaction. This is BJP’s political response to Congress and other opposition parties who believe in objectives of Bank Nationalisation."

The three banks’ boards are expected to meet within 10 days to discuss the proposal. However, the merger is almost certain given that the majority ownership is with the government.

After the announcement on September 17, Bank of Baroda MD and CEO PS Jayakumar said the merger would take four-six months and the share-swap ratio would be decided soon.

But Parekh underlines the merger process will take at least 3-4 quarters to complete and given the quality of loan book and NPA being an issue for all banks, the merger will be a challenging task.