New Delhi/Mumbai: P.S. Jayakumar ended his term as Bank of Baroda managing director and chief executive on Saturday without a further extension, belying expectations that his tenure would be extended by the Union government to oversee the task of fully integrating the lender with two smaller banks.
A replacement for the position will be announced in a day or two, a finance ministry official aware of the matter said, requesting anonymity. Jayakumar, one of two private sector professionals chosen to run a top state-run lender in 2015, received a one-year extension after his initial three-year term ended on 12 October 2018.
A Bank of Baroda spokesperson declined to comment. Jayakumar did not respond to a text seeking comment.
The end of Jayakumar’s term comes at a time when the state-run bank is still in the process of integrating Dena Bank and Vijaya Bank with itself. The government proposed the merger of the three state-owned banks in September 2018. The merged entity, comprising two relatively stronger banks and a weak one, is the third-largest lender in India after State Bank of India and HDFC Bank Ltd. The merger was completed in April.
“Jayakumar’s exit isn’t good news for the bank. The government’s move to deny an extension to him does not ensure continuity of the management at a time when the bank is in the process of completing the merger process,"said a Mumbai-based banking analyst, who declined to be named.
Over the past year, Jayakumar has devoted most of his time towards merger-related work. The banks are in the process of integrating their software systems. While Bank of Baroda has been using Infosys Ltd’s Finacle 10 software, the other two have been working on Finacle 7. In its first quarterly earnings report, the merged bank reported a net profit of ₹710 crore for the three months ended 30 June compared to a ₹49 crore loss in the year earlier.
Jayakumar’s exit is significant not just for Bank of Baroda, but also for the 10 public sector banks that are in the midst of a three-way amalgamation process. On 31 August, the government abruptly announced that it would merge 10 public sector banks into four. These banks are trying to replicate Bank of Baroda’s model of consolidation. Last month, heads of all the 10 banks met the Bank of Baroda management to understand the complexities involved in the merger process.
Among state-run banks, the top positions at Bank of Baroda and Bank of India are now vacant. The government has already started the search process for the banks including Bank of Baroda, Bank of India, Canara Bank and Punjab National Bank even before finance minister Nirmala Sitharaman announced the amalgamation of the 10 state-run lenders. While the government has named S.S. Mallikarjuna Rao as the new CEO of PNB, the post in Bank of India has been vacant since 1 July.