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Notwithstanding concerns over the outcome of bank consolidation, the amalgamation of Canara Bank and Syndicate Bank is expected to improve profits significantly.
‘Project Synergy’ aims at combining the best practices of both banks, and the amalgamated entity will witness a jump in total business at ₹25-lakh crore in the next five years.
“The amalgamated bank will have a total business size of close to ₹16-lakh core as on March 31, 2020, and this is expected to increase to ₹25-lakh crore in the next five years,” said the top executives of both banks in an internal communication.
Net, operating profits
The operating profit of the amalgamated entity is expected to increase to about ₹28,500 crore, with a corresponding surge in net profit at ₹10,800 crore in the next five years.
The economies of scale are expected to translate into “better profitability, wide product offerings and adoption of state-of-the-art technology serving as catalyst for growth”, according to the management.
It may be recalled that the government had, on August 30, announced the amalgamation of the Bengaluru-based banks. The scheme of amalgamation is expected to be notified soon.
HR policy
The managements of both banks have also assured the employees that the amalgamation “will provide brighter professional prospects” for staff members and that there was no need for any concern. The promotion process of all cadres will also be completed by the end of January.
The amalgamated entity will have a total network of 10,366 domestic branches, 13,354 ATMs and 89,885 employees. The branch network will double in Andhra Pradesh, Telangana and Uttar Pradesh.
The customer base, too, will go up to 14.6 crore. It is expected to cross 18 crore over the next five years. The large number of employees is being seen as a strength as it will give access to a wider talent pool.
There are 34 functional committees, comprising representative from both banks, that are working on the amalgamation plan. The consultants have been engaged for financial, legal due diligence, independent valuation, and fairness option.
The independent valuers are expected to arrive at a common share-swap ratio soon, according to sources.
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