Bigger PNB to have edge in getting big corporate customers

The merger of United Bank of India (UBI) and Oriental Bank of Commerce (OBC) with Punjab National Bank has made it the second-largest stateowned bank. In an interview with Joel Rebello, PNB’s chief executive officer SS Mallikarjuna Rao says the merger would give it enormous reach and build a stronger bank. Edited excerpts:The merger was conceived during normal times and now it’s totally different with Covid-19. How does this change the way you look at it?There is no change because majority of the activities were planned before. Covid came only in March. The only difference is that we wanted to change the branding and have physical meetings with customers as well as employees which has now been postponed. From the customer point of view it is business as usual. Today more than 90% of our branches and ATMs are working. We have deployed 50% employees with change-over days on a rotation basis because of the lockdown but footfalls in the branches have also fallen.You have become the second biggest among PSU banks. How do you capitalise on it?Large corporate customers are looking at a smaller sub-set of banks for their business. We being largest now, will give us advantage to get these customers. Our combined entity will have Rs 7.7 lakh crore in advances up from Rs 4.76 lakh crore in December. Our total business will be over Rs 18 lakh crore.What about branches? Other merged entities also face overlaps. What is the scene with you?Most of our branch overlaps are in North India with OBC. We have identified the branches in the vicinity of 500 metres and we will merge them and use the licences elsewhere. We will do that after June especially in southern states where we don’t have much presence. We will also build branches in the West. We have one-lakh workforce which we expect to continue with. We are creating different types of roles which will be effective after the lockdown. We will focus on mid corporate offices for Rs 1 crore to Rs 50 crore. Large corporate branches will directly report to the head office. The segment between Rs 100 crore and Rs 500 crore is dominated by private banks and after this merger I think that is an opportunity for us.UBI was under prompt corrective action. How much of a dent does that make?Mathematically if you look at it, the OBC and UBI balance sheets together are half of PNB so they have a limited impact on the net ratios. Combined it’s not going to be adverse because recoveries have been good this year. For UBI, because they were in PCA, many of the existing customers were not getting enhanced credit facilities particularly in the MSME sector in the East and North-east. That is a big opportunity for us. Our net NPA was 7.28% as of December and because of recoveries we expect less than 7% net NPA for the combined entity. There will be harmonisation in provisions.Organisational structure and human resources are vital issues. How do you deal?All three banks had certain circle officers especially in metro locations which are not required now. In some locations we require but we didn’t have people. We have identified all these locations and done the background work but could not implement it. The realignment and reporting mechanism will be started the moment lockdown ends. We will increase our circles by about six to 160 and zones by five to 24 zones. Loan processing will be centralised in 160 locations covering all 11,000 branches so that the turnaround time and quality of credit underwriting will be ensured.What about technology which some believe is the biggest nightmare?In terms of core banking we are all on Finacle but versions are different. We expect the databases to merge in nine months. We have already collected the data so we have already started work. But products and services have been aligned. From today, interest rates and charges will be similar. Customers can access specified facilities in any of the branches from tomorrow like cash withdrawal. Account numbers won’t change. RBI has given a time window of 12 months for IFSC and MICR codes. We plan to replace cheque books within three months. Debit cards will also be issued in a phased manner.

from Economic Times https://ift.tt/2USSJEK