The Hindu Business Line : Bank mergers: Unions chart protest plan

THE United Forum of Bank Unions (UFBU) has drawn up an agitation programme to protest the proposed consolidation in the banking industry. Meetings with members of Parliament have also been lined up.

The consolidation plan, which is said to be supported by the Government, will lead to more harm than good, claimed Mr Ashok Datta, Convenor, UFBU.

Larger entities created by consolidating localised players may well be subject to raids by multinational outfits, while some employees will become redundant. Further, mergers of bank branches may also discourage the public, especially those situated in far-flung areas, from accessing banking services, the forum has maintained.

"The signals are confusing. Some sections feel that strong banks should be merged with weak ones. Some others are talking about creating a few mega entities. However, nothing is being conveyed to employee unions," Mr Datta told newspersons here.

UFBU is also aware of the opinion favouring large banks that will compete more effectively with the largest domestic player in the sector — State Bank of India. It is, however, unable to appreciate the reasons that are being forwarded in this context. The proposal, which is ostensibly aimed at giving the global giants a chase, is inherently weak.

There will be submissions before representatives of Indian Banks Association (IBA) and other agencies. Bank unions may also consider striking work at later stages.

Neither the Government nor the IBA has discussed the issue of consolidation with the unions, the forum alleged. Specifically referring to the proposal to unite Bank of India and Union Bank, Mr Datta said that a merger would reduce the number of branches in two key states, Gujarat and Maharashtra.

`Numbers tell the tale'

The United Forum of Bank Unions has given comparative figures to suggest that even a merger of all 19 nationalised banks will not create a new entity of international status. The Tier I capital of JP Morgan Chase, HSBC and Deutsche Bank, for instance, stands at $23,167 million, $13,380 million and $27,302 million respectively. In comparison, Indian banks such as SBI, PNB or Canara Bank appear to be midgets. Their Tier I numbers are $114 million, $57 million and $89 million respectively.

The consolidated figure for all the 19 nationalised banks is $2,965 million. This, UFBU has stated, indicates that consolidating the entire PSU banking industry, including the SBI group, will not create a global giant.

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Bank mergers: Unions chart protest plan