“Somehow, they feel size is everything. It is true that if the net worth gets bigger, they would be able to give larger corporate loans. But it is not the case now that the corporates want to borrow, and the banks do not have the size to lend. The plan seems to be merge and then privatise,” Hemindra Hazari, a senior banking analyst, was quoted as saying in a recent ET report. A lot of mergers do not work, Hazari says, adding that often they don’t achieve the synergies initially intended at the time of announcement. “In the case of SBI and its associates, they had a lot in common, the SOPs, the technology and even HR policies. But, in these banks, that is not the case, the cultures would be very different.” Also, banking needs a regional focus, which many of these smaller banks have. They have their own understanding of their customers and practices. Once you merge and become a national entity, this whole focus gets lost, Hazari adds.
