UAE- Business as usual during $204 billion BoB merger move

(MENAFN- Khaleej Times) Gulf operations of Bank of Baroda (BoB), the only Indian lender with presence in the UAE, will get stronger following its impending merger with two other public sector banks, the bank's regional head said on Tuesday.

"However, it will be business as usual for our operations vis-a-vis customers in the UAE and other Gulf countries, albeit the strategic three-way merger will enable the new entity to emerge as the third-largest Indian bank with a wider and broad-based client base," said D. Ananda Kumar, chief executive (GCC Operations), Bank of Baroda.

With better financial strength, the merged entity will also be well positioned to substantially increase market reach, particularly in south India, and operational efficiency, said Kumar.

In the UAE, BoB has been operational for over 40 years.

Currently it has six branches, nine electronic banking service units and 46 ATMs.

The amalgamation, announced on Monday, will be the first-ever three-way consolidation of banks in India, with a combined business of Rs 14.82 trillion ($204 billion), making it the third largest bank after SBI and ICICI Bank.

After the merger, the number of public sector banks will come down to 19.

"The consolidation will help create a strong globally competitive bank with economies of scale and enable realisation of wide-ranging synergies," Indian Finance Minister Arun Jaitley said.

This is the fourth major restructuring in the financial sector after Prime Minister Narendra Modi came to power.

It kicked off with the merger of State Bank of India's five subsidiaries with their parent along with the Bharatiya Mahila Bank.

The move follows top lender State Bank of India last year merging with itself five of its subsidiary banks and taking over Bharatiya Mahila Bank, catapulting it to be among top 50 global lenders.

Banking sector reforms are a major plank of Modi's administration to revive lending, which has slowed to multi-decade lows as banks struggle with bad loans.

The government owns majority stakes in 21 lenders, which account for more than two-thirds of banking assets in Asia's third-biggest economy.

But these banks also account for the lion's share of more than $150 billion in bad debt which is weighing on the sector, and need billions of dollars in new capital in the next two years to meet global Basel III capital regulations.

The new bank is expected to have a net non-performing asset ratio of 5.71 percent of its total assets, nearly 9,500 bank branches and 85,675 employees. -

Issac John Associate Business Editor of Khaleej Times, is a well-connected Indian journalist and an economic and financial commentator. He has been in the UAE's mainstream journalism for 35 years, including 23 years with Khaleej Times. A post-graduate in English and graduate in economics, he has won over two dozen awards. Acclaimed for his authentic and insightful analysis of global and regional businesses and economic trends, he is respected for his astute understanding of the local business scene.

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