The Hindu Business Line : Going for 3, 4-way mergers!

THE chief executives of public sector banks are faltering hopelessly in elementary mathematics. After dutifully repeating the equation `one plus one is equal to one' in the Finance Ministry-Reserve Bank of India organised classroom for mergers, it is now time for the smarter ones to tackle maths with some higher degree of difficulty. The brighter ones are now learning to add `one plus one plus one (at times adding one more one)' but the answer is the same - that magic figure of `1'.

As the merger hysteria grips the public sector banks, a section of top bankers appear to be drumming themselves up into a higher state of delirium by thinking of heading ever-so-larger banking entities through three-way or even four-way mergers among the State-owned banks.

"I can visualise consolidation at a much larger scale than what is being talked about. It is not always going to be the large shark eating the small fishes, but several small fishes could be joining up to become a shark," a Chairman and Managing Director of a public sector bank said.

Another chief of a State-owned bank agreed. "It is quite possible that there could be three or even four-way mergers. This can happen within the PSU bank fraternity itself or may even involve private banks. But I would like to hazard a guess when this would happen," he said.

The Government too doesn't mind the bankers thinking big. "Nothing prevents them from looking at such (merger involving three or four banks) options. We have already said that we would not be part of the merger exercise but would support it if found expedient," a senior Finance Ministry official said.

The Finance Ministry has already indicated that the Government would like to announce at least two big-ticket mergers by the end of the current fiscal. The Government has also initiated formal moves towards facilitating the mergers by moving a proposal for amending the banking laws to enable PSU banks to have four full-time directors including the Chairman. At present, state-owned banks are allowed to have only two full-time directors - one CMD and one Executive Director.

By doubling this number, the Government is trying to ensure that the full-time directors of the merging banks are accommodated in the new entity.

More Stories on : Public Sector Banks | Mergers & Acquisitions

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Pvt operators asked to track ILD calls thru Reliance

Naresh Chandra panel for unbundling AAI

Cement output, despatches up

Foreign airline stake in domestic carriers at a `later date'

Compensation formula on a state-to-state basis — Accord reached on VAT package

Central Sales Tax regime to stay till 2005-06

Vinita Bali to head Britannia

Robust earnings season keeps market positive

Going for 3, 4-way mergers!

IndusInd Bank raises deposit rates; UTI Bank may follow suit