Merger helps Bk of Baroda step up personal lending: CEO
Bank of Baroda Managing Director and CEO Sanjiv Chadha told TOI that the lender completed the integration of 2,898 branches of the former Vijaya and Dena Bank in December of last year. Since then, the bank has benefited from economies of scale and the rationalization of branches. “There were 1,300 branches that were closed where there was an overlap, rent and tax expenses went down in absolute terms,” Chadha said. He added that the merger has also reduced the need for new hires.
Another cost saving has been in interest charges. “The ratio of deposits to low-cost current and savings accounts (CASA) of the merging banks was lower than that of the stand-alone Bank of Baroda. As a result of the merger, BoB’s CASA increased from 40% to 36%. We not only recovered what we lost, but we moved forward with a CASA ratio of 43%, ”said Chadha. While the activities of Vijaya Bank have given Bank of Baroda a head start in the retail business, Dena Bank has consolidated its position in western India, particularly in Gujarat. The public sector bank is also saving capital by closing international branches in South Africa, Hong Kong and Trinidad and Tobago.
Chadha said the bank also stands to gain from the new checking account standards, which require borrowers to maintain checking accounts with banks that provide them with a credit / overdraft cash account. He said the bank had a strong collection business, which had grown 70% year-over-year and was in competition with private and foreign banks.