SBI Associates merger: a few questions
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Published in http://www.livemint.com/2007/10/02005117/The-merger-melodrama.html |
Nearly 52 years ago, the visionaries and architects of our nascent nation had envisaged a robust bank which would have a national character with its representative offices spread across the length and breadth of the country. This was to be achieved by amalgamation of the erstwhile Imperial Bank of India and the 10 representative banks of different states. However, this was not to be as a section of the ruling intelligentsia, almost certainly guided by their personal interests, managed to scuttle a well meaning consolidation by arguing that the time for such an event lay in future. It was also argued that the state owned banks had a strong regional character and amalgamating them into a bank of national stature would upset the local cultural balance and jeopardize the profitability of these institutions, as also the welfare of the region!
The alternate path suggested led to creation of the State Bank of India and its 8 subsidiaries (two subsidiaries were to be merged later on to form one). More than half a century and many a committee later the State Bank Group still remains a loosely knit garment for the increasingly heating up financial catwalk, what with the imminent opening up of the sector to humongous global players. In the bargain, the so-called culturally linked subsidiaries have been increasingly loosing market share to the suave, new age private banks.
As noted by the now famous McKinsey & Co report, the existing structure is dysfunctional in the way they compete with each other, among other absences of synergies. Further, the structure has resulted in localized coteries of power which are striving their best to maintain the status quo to suit their personal interests. Economic and operational common sense are being tossed to wind in the name of protecting the regional character of the Associate Banks, avoidance of creation of a monolith, possible parochialism and subjugation of the human resources by the parent, i.e., the State Bank of India, if merged with.
There always was a time, however, none better than this to ask a few questions of the powers opposing the merger of the Associate Banks:
1. Was Sardar Patel guilty of destroying the regional and cultural uniqueness of many a princely state by merging them with India?
2. Is India better off existing as one country or should it have allowed numerous Associates to tow along with it in its journey to future?
3. Is it not a fact that the disparate ‘socio-cultural’ regions are embracing technological advances in education, medicine, communications etc.? Are these regions not being wooed away by modern looking tech savvy institutions?
4. If an institution like Bank of America opened offices in these regions and made its locally recruited officials wear ethnic costumes and speak local languages, would it be a charade, a regional murder, an invasion or an act of cultural preservation?
So, Friends, Associate Bank employees, Bankers! Rise and pour your emotions on the proposed merger of the Associate Banks with the parent, State Bank of India.
Is not the bogey of associate banks loosing their regional character and hence loosing their business being raised by these “coteries of power”? I rather think the asscociates will loose their business to private/foreign players if they don’t globalise themselves. What better then than merging to form at least a national “monolith”?
Excellent job, Mr Pandey, Keep it up!
The survival of associate banks is endangered due to their regional character, small size, lobbying and lack of expertise in management.
it is a God-sent opportunity for associate banks to merge with SBI and become part of the largest bank or later-on fall prey to govt.whims.
Associate Bank staff members should rise to the occassion and demand fast merger with sbi at par
level
comrade R S Meena
we are (associate banks) nobody outside our respective states and every year losing our market share in these states as well to other nationalised and private banks.Govt.is least concerned about us.It is because of SBI deputations and SB Staff Colleges that we gain some expertise.
In such a situation our slogan should be
MERGE OR PERISH
HATS OFF TO YOU
S K Mukherjee
In 1992, I heard about the possibility of merger of the seven associate banks with SBI for the first time. In fact, it was revealed to us by a `reliable source’ that the merger was imminent; it should not take longer than three months. Well, I have been patiently waiting for fifteen years for the merger to take place. It may have taken a while for things to take a more concrete shape – fifteen years to be precise – but the desirability or relevance of merger has not diminished in all these years. If anything, with globalization of the economy, huge exposures of commercial banks to infrastructure projects and stringent capital adequacy norms, the case for merger has become even stronger.
I have been an unabashed supporter of merger. I have failed to see any of the pitfalls that the opponents of merger have been incessantly talking about. For me, the benefits are obvious. We become an integral part of a much bigger organization and one of the best known brands in the country. The talented officers will get a much better opportunity to showcase their capabilities. Financially too, we will gain in all likelihood and in any case will not lose out. Then why do we oppose merger? In fact, most of the officers I have spoken to are totally in favour of merger. Those who are vehemently opposing it will tell you that officers of associate banks will face an identity crisis, they will always be second class citizens, there will be rampant discrimination by the parent bank. There might be some truth in that initially we might have to put up with a certain amount of condescending attitude. However, I am sure that once an officer from an associate bank shows that he is no way inferior, he is bound to earn grudging admiration and afterwards total acceptance as an equal. The bogey of discrimination is being raised by people who have so far been big fish in a small pond and now are scared of losing their importance; those who have so far survived or prospered with their politicking and machinations in a conducive environment, people without any talent who will stand exposed in the face of true competition; those who have always managed soft postings, that too in places of their choice. An officer who does not belong to any of these categories should welcome merger with open arms.
AB
It’s an amazing blog! So much has been put in so few lines! Agree with every bit of what has been said by Pandey and others. If you are a good swimmwer, you need not be afraid of the high seas that sbi is. Remember, there are people there already and they could be afraid of you! However, this mutual distrust should vanish soon. Like water, you’ll find your own level.
A Pulitzer for Pandey!
The blog as well as the comments have brought out the thinking of majority of the officers of associate banks. Only leaders and chamchas have something to loose!
While merger with SBI is inevitable, the same has to be done taking into account that the officers and men of the associate banks are no less when compared to their counterparts in SBI. The inter-se parity in seniority and other HR issues have to be addressed in detail and also made public so that the self-seeking powers opposition to the merger can be defeated. It is not that the entire workforce of associate banks are anti merger. Not only that the quality of the staff working in the associate banks is also of a very high standard. It is SBI which is seeking the merger not for any managerial reasons pointed out by Mckinsey & Co but for keeping the No. 1 position in the country. Therefore, as forced partners in the marriage, equitable justice is to be done to the aspirations of the workforce of the associate banks.
Mr. pandey is comparing the consolidation of the nation as a single entity to the consolidation of state bank by merging all the associates with sbi. he is asking rhetoric questions like was sardar patel wrong in uniting the country? etc. etc. the citizens of the princely states as existing did not have equality before law or other equitable positions as it was available to the people living in the british ruled areas of the country post independence. therefore, there was a clamour for unity and merger of the free independent princely states with the Indian union. On unification, the entire population of the unified country enjoyed the same privilieges and rights equally across the country save for people of J&K. We all are aware of the megers of the banks in the recent past. take a look at the merger of times bank with that of hdfc bank, new bank of india with punjab national bank, bank of cochin with sbi, bank of punjab with centurion bank and later lord krishna bank with centurion bank of punjab. what is the status of the persons working in the bank that was merged with the bigger/ better one in all these cases? where is the guarantee that such a misfortune will not befall the workforce of the associate banks due to merging them with sbi? the one and only issue of substance that sbi management has to address is the hr issue and that needs an open and frank approach so that all stakeholders involved in the merger go home happy. with the size of the employees union and the officers association of sbi, the sbi management may feel that they have to satisfy the demands and requirements of their own union and association demands before even talking to the unions and associations of associate banks. legally sbi may be right in enforcing merger on associate banks since in all banks, sbi holds more than the minimum stipulated 75% for carrying forward the legal requirement of merger. are they right morally without telling the workforce of the associate banks what is in store for them once merger is through?