Assimilating the take over of United Western Bank, IDBI Bank now is gearing up to acquire at least one more bank in the current fiscal in a bid to expand its branch network across India.
Speaking to FE, Yogesh Agarwal, chairman & managing director, IDBI Bank, has said, “We have identified few private sector, also some of the public sector banks, and have already initiated the negotiations with them. A deal to buy at least one private sector bank is not ruled out completely in the current financial year. However, the merger with a public sector bank solely depends on wish and the policy adopted by the government of India.”
Agarwal explained that IDBI Bank has got experience of two mergers. Even the government of India now looks at IDBI Bank as a focal point around which future mergers and acquisitions will take place. The bank is open to further acquisitions as past two acquisitions have accurately taught the bank to identify the prospective takeover targets within the Indian banking industry.
Agarwal said that since 80% of the banks in India are state-owned, the government itself has to play stronger and a decisive role than the public sector banks for kick starting mergers and acquisitions among themselves.
“Although Indian finance minister has expressed a view that he would like the mergers to take place voluntarily, I do not think that mergers among the banks are likely to take place voluntarily as usually 50% of jobs are laid-off when two banks merge. It is thus bound to meet a stiff resistance from the workforce of both the merging banks,” he added.
He said that although Indian banking sector was doing pretty well, within the industry there existed some relatively weaker banks. Post 2009, a few foreign banks are most likely to acquire some of the weaker banks in the country if given a free rein by the regulator.”
“As far as IDBI Bank is concerned, the government of India is not going to sale its stake to any foreign bank as that has already been conveyed to me by the finance minister. I do not think that the government of India would ever think of selling a stake of any state-owned bank to any foreign bank in future,” he added. The bank is currently on a hiring spree.
“Though we inherited only 1800 staffers when we bought IDBI Bank, around 1300 of them left us
within two years after the takeover as then IDBI officials delivered an impression to IDBI Bank staffers that their salary levels would be scaled down to match the remuneration standards of public sector enterprises.''
The exodus thus created a dearth of trained workforce in IDBI Bank. Also, the bank needs more people since we plan to open at least 200 new branches in the current financial year at an investment of Rs 10-15 crore.
“By March 31, 2009, we expect to have around 700 branches across the country,” he said.
Source: Financial Express