BoB hopes to save Rs 9,500 crore from merger

Mumbai: Bank of Baroda (BoB) estimates that it will save Rs 9,500 crore through cost rationalisations, sale of overlapping assets and revenue synergies with the merged Dena and Vijaya banks in the next five years, a senior bank official in charge of the merger said.

The bank has identified 537 branches out of which 345 will be merged with each other and 192 will be relocated.

It has also started selling some properties, upgrading systems and relocating staff as it seeks to complete the full process of amalgamation by December 2020, Murli Ramaswami, officer on special duty who is in charge of the amalgamation, said.

“Consulting firm BCG has helped us in identifying branches in a 3-km radius, especially in metro cities which can be merged or redeployed in the nearby area. Infosys is working on a tool to migrate all branches to the latest platform. We have also started selling some properties like extra residential quarters and have already saved Rs 62 crore this year. All these cost rationalisations and revenue synergies will add to Rs 9,500 crore in five years according to our estimates,” Ramaswami said.

Ramaswami will take over as executive director (ED) in BoB after Papia Sengupta retires at the end of this month. He was ED in the erstwhile Vijaya Bank. BoB acquired Dena and Vijaya Bank in the first such three-way merger which was announced in September last year. The merger was effective from April 1.

All three banks were using Infosys’ Finacle IT platform which was an important reason for the government’s decision to merge them. But Dena and Vijaya were on older Finacle 7 systems whereas BoB was on Finacle 10. “Infosys is now working on a tool which will help migrate Dena and Vijaya branches on Finacle 7 to Finacle 10. A pilot will be done in two branches of Dena and Vijaya in Vile Parle, Mumbai, and then will be rolled out in other branches in a phased manner,” he said.

Currently, the bank has connected 47 per cent of its advances on the updated system and expects to cover 75 per cent of the advances by March 2020. It has moved loans of Rs 30 crore and above to the new system.

A few days ago, the bank sold executive quarters of the erstwhile Vijaya Bank for Rs 32 crore and has also surrendered some 23 surplus zonal offices of the bank.

“We are now helping with the merger of the new set of banks. We held a one-day workshop for the CEOs and directors of the newly-merged banks on September 4 and are helping them with our experience,” Ramaswami said.