Bank strike: Services to be affected as 9 unions call for nation-wide strike against Vijaya, Dena, BoB merger

Bank services will be affected today as nine bank unions, with close to 1 million employees, have again called for a nation-wide bank strike against the proposed merger of Vijaya Bank and Dena Bank with Bank of Baroda (BoB). This is second bank strike within a week against the merger of these state-owned banks. Before this, the state-run bank unions had held a strike on December 21. Most of the state-owned banks have already informed their customers about the bank strike call given by the unions, but banking and ATM services could still be affected due to holidays. However, private banks will remain functional.

CH Vekatachalam, AIBEA (All India Bank Employees' Association) General Secretary, said during their meeting with the additional chief labour commissioner, no assurance was offered, forcing them to go on the bank strike. Major demands of the bank unions include immediate settlement of wage negotiations and assurance from the government that there will be no bank merger of Vijaya Bank and Dena Bank with Bank of Baroda. The bank unions believe the proposed merger will not help the government as the merged entity will still not find a place in top 10 banks globally.

The bank strike is being organised by the United Forum of Bank Unions (UFBU), an umbrella organisation of nine unions, including the All India Bank Officers Confederation (AIBOC), the All India Bank Employees' Association (AIBEA), National Confederation of Bank Employees (NCBE) and the National Organisation of Bank Workers (NOBW). The UFBU claims membership of 10 lakh officers and staffers.

The government had given its nod to the proposal for the merger of Bank of Baroda (BoB), Vijaya Bank and Dena Bank in September. It was part of the government's strategy to promote consolidation in the sector marred by loads of non-performing assets (NPAs). However, this is the first three-way merger in the public sector banking space. Before this, the State Bank of India had merged five of its subsidiary banks with itself and took over Bharatiya Mahila Bank, which secured it a place among the top 50 global lenders.

Also read: How Vijaya Bank compensates for Dena Bank's inclusion in merger with Bank of Baroda

Unlike bank unions, market experts believe the merger of weaker PSU banks with large banks make sense. Given that Dena Bank, which is among 11 banks under RBI's PCA framework, is quite small in size, they do not see its amalgamation with larger banks BoB and Vijaya Bank hurting the balance sheet of the combined entity much. They see the move working in favour of the merged entity in the long term, with Bank of Baroda offering the big 'base', and Vijaya Bank giving the 'kicker'. They believe that if this merger goes well, in all likelihood, further consolidation could be seen in the PSU banking space.

All the 38 listed banks accounted for gross NPAs totalling over Rs 10.17-lakh crore in the quarter ending March 2018. As part of the government's initiative to minimise NPAs, it is important to merge these three banks. Gross NPAs of Dena bank rose from Rs 2,616.03 crore for the fiscal ending March 2014 to Rs 16,361.44 crore for the fiscal ending March 2018. Vijaya Bank's gross NPAs rose from Rs 1,985.86 crore in FY14 to Rs 7,526.09 crore FY18. The gross NPAs of Bank of Baroda rose from Rs 11,875.90 crore in FY14 to Rs 56,480.39 crore in FY18.

Also read: Bank of Baroda-Vijaya-Dena merger: Gainers, losers, swap ratio and more

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