SBI will not benefit by merging State Bank of Saurashtra with it

SBI will not benefit by merging State Bank of Saurashtra with it
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First Published: Thu, Aug 14 2008. 01 04 AM IST

Clear talk: Goel says the merger is not fit ideologically
Clear talk: Goel says the merger is not fit ideologically
Updated: Thu, Aug 14 2008. 09 18 AM IST
Mumbai: The All India State Bank Officers Federation is opposing the merger of State Bank of Saurashtra with the country’s largest lender, State Bank of India, or SBI. The merger, which had been delayed because of opposition by the unions, was approved last month by the Union government.
Clear talk: Goel says the merger is not fit ideologically
The federation’s president, T.N. Goel, said in an interview that the proposed merger would not bring any benefits to SBI and the integration of the two lenders would be difficult given the differences in their size and work culture. For Bank of Saurashtra employees, however, the merger means pension benefits they now lack. Edited excerpts:
Why are you opposing the merger?
We are opposing the merger because it will not benefit the bank.
Why do you think so?
State Bank of Saurashtra is a very small bank with a business of around Rs25,000 crore while State Bank of India’s business is more than Rs8 trillion. Saurashtra has a different work culture and integration with State Bank will be very difficult.
Ultimately the management may merge all seven SBI associate banks. They have regional character and cater to a particular clientele.
Ideologically too we are opposed to bank mergers.
A few years ago you were in favour of mergers among the seven associate banks.
Yes, there was a time when associate banks were favouring a merger among themselves because they have something in common. The federation had taken a stance that it would not oppose a merger among the associate banks and if that had been accepted by the State Bank management, we would have created the second biggest public sector bank (after SBI).
Right now we are not favouring that idea. The State Bank board has approved the merger, but our representative at the board had opposed the merger. The finance minister has been advocating mergers of public sector banks for more than four years. But none of the other public sector banks has so far come up with a merger proposal. The State Bank chairman is taking the lead without discussing the relevant issues with the trade union.
Neither the government nor bank employees are against the merger. Following the merger, Saurashtra employees will get the pension benefit as State Bank employees get them. You are getting increasingly marginalized....
The State Bank management should even otherwise give pension benefits to Saurashtra employees. The associate banks have been demanding pension as a retirement benefit for so many years and all along the management has been saying it does not have funds to offer pension. And now to lure them into accepting the merger, the State Bank management is offering it.
But the Saurashtra employees are happy...
The State Bank is exploiting helplessness of these employees who have been fighting for pension as a retirement benefit. If the State Bank management accepts associate banks’ demand for three retirement benefits enjoyed by State Bank employees, we would like to see whether any employee would like to support the merger.
Don’t you think consolidation is inevitable?
Let’s be very practical. As far as global competition is concerned, even if all public sector banks merge and become one big giant bank of India, it cannot match the balance sheet of Citibank or other big banks of the world.
How can we say that merged entities will be able to fight with global banks if the sector opens up? The government should not permit the foreign banks to enter India. Our banks are doing pretty well and there is no weak bank. Their profits are going up and non-performing assets going down. There is no reason why they should merge.
Will you oppose the opening up of the sector?
Definitely. We are against opening up of the financial sector to global banks.
What would be your future course of action?
We are trying to impress upon the banks that the merger is not in employees’ interest and don’t go for a merger to please the management and the finance minister. It has become a fashion for the finance minister to talk about mergers from every possible platform. The government is officially leaving the merger decisions with the bank boards but in reality there is indirect pressure on bank managements (to merge).
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First Published: Thu, Aug 14 2008. 01 04 AM IST