Merger Mania VI

MERGER MANIA VI

BY

S.SRINIVASAN

PRESIDENT

NATIONAL UNION OF BANK EMPLOYEES

(NUBE)

Now Once again Consolidation Rhetoric:

Some consolidation in banking space inevitable: FM

“Consolidation alone will give banks the muscle, size and scale to act like world class banks. We have to think global and act local and seek new markets, new classes of borrowers.”

P. Chidabaram

Pitching for consolidation in the banking industry, Finance Minister P Chidambaram said India would need one or two global-size banks as it marches ahead to become the world's third largest economy. at the Bancon-2012 recently  Pune on 24 November 2014

"Finding new business models will inevitably lead to some consolidation ... We must create at least 2 or 3 world size banks. China has done it.

"And if India wants to be ... and it will be the third largest economy in the world ... we must also have one or two world size banks and some consolidation is inevitable," he said at Bancon-2012 meet here.

Unions have been opposing mergers and consolidations in the banking space.

"We should not fear consolidation. I know there is pride and identity, but ultimately some consolidation would have to take place in the banking system in this country," he said.

He further said that while consolidation takes place among top banks, there would be room for local area banks as well.

"In fact, I regret that the idea of the local area bank which was started in 1996 stopped after first three licences were given. I think there is place for a local area bank for serving people of the region, local area, drawing strength from those people and serving those people," he added.

There are 19 nationalised banks and scores of private and foreign banks in the country. In addition there is State Bank of India, which is the largest lender in the country. It has also five associate banks.

SBI has acquired board approval for the merger of the its remaining five associates with itself. It has already amalgamated two of its subsidiaries.

The Finance Ministry had recently asked large public sector banks to hand-hold smaller counterparts to improve the latter's functioning.

Hence it has  become imperative for us to understand macro  & micro economic indicators of China and India  and in  all aspects as well as important  banking indicators  to expose the bankruptcy &  hollowness of these rhetoric and grind to dust these spurious logics  peddled blitzkrieg  in electronic and media by the Finance Minster.  

Comparison of India and China

“The Stalwart of Indian Financial community nodded there heads sagaciously when Prime Minster Mr.Manmohan Singh said in his speech “ If there is one  aspect in which we can confidentially assert that India is ahead of China it is the robustness and soundness of banking system”.  Indian banks have been rated higher than Chinese banks by the international rating agency Standards & Poor’s”

Therefore the analogy of the FM comparing Indian banks with Chinese with regard to scale an size only is akin to seeing the part but not the whole, seeing the trees but not the forest.

In the under mentioned tables A to D and the tables E, 1.1    to 2.2 under the heads in the annexure

To read further please click on following link
https://docs.google.com/document/d/1OdEnPjA2g3wwzFcIhEjFDm1MVY9YauDqJJHmBZqHTy8/edit