Thursday, May 11, 2017

We Should Try to be Among World's Top 30: SBI

Excerpts from an interview with State Bank of India chairman Arundhati Bhattacharya...

On preparations for the merger

We started with putting together a team at the corporate centre and transition teams on ground. There were seven groups, including technology, accounting, credit quality, organisational structure and human resources. Each group had members from both SBI and the subsidiary working out challenges, gaps and what we wanted to achieve. Then there was the monitoring committee led by the MD of associates and subsidiaries and MDs of the associate bank. I will sit in on the review process of the plan on a quarterly basis or more frequently, if needed.

On the most challenging part of the process

Two things. The first is the HR piece. It is a question of so many people coming into the organisation. When we discuss a merger of two parties, we talk of culture. Here, the DNA and culture of seven organisations are coming together (SBI, five subsidiaries and Bhartiya Mahila Bank). We have to make sure the people are handled and re-skilled properly. HR is the biggest challenge.

The other thing is IT. While everyone uses the same central system, the versions are different, patches are different. There were 350 applications in different banks which need to be aligned. There were overlaps, so we needed to pick one. In some cases, we felt we did not need to pick it at all. We ran 62 mock trials of the data merger to ensure that the final integration works smoothly.

On whether the process will divert focus away from the core business

Not at all. For all those not involved in the merger process, it was business as usual. To ensure that people would not take their eyes off routine banking, we opened clear lines of communication. Internally, we held town halls. Deputy managing directors of subsidiaries held interactive sessions on a regular basis to ensure people didn't pull back on work.

Among customers, there is more than 80% overlap in the loan books, so teams were patched together and handed over to single customer relations managers. A few days ago, we discussed how we can showcase better abilities to the customers of erstwhile banks. Under SBI, we can offer any loan product that was not available to subsidiary customers so far.

On competing against the private sector

We will have a bigger reach along with our global presence. This is a network customers can truly leverage. It gives us an even bigger advantage in the retail space. We can leverage technology synergies. For example, a customer can generate a token number from the app and needn't stand in line at the branch. Our digital and social media efforts can now be combined. The move also frees up some very highly skilled people. Earlier, there were five treasuries using 200 people. The expanded treasury is only using 20 more people, so 180 highly-trained staff are free for other tasks.

In the corporate book, we have 80% common customers. So six independent teams were serving accounts of the big conglomerates but now we need only one. These high quality and skilled teams can be redeployed. There were also some gaps in mid-level management that arose from lower hiring in certain years. Those have been bridged completely.

On how long before competitors have to face up to the new SBI

One or maximum two quarters!

On global prospects

We will grow our international banking in a way that makes sense for us. We have some very good prospects in the neighbourhood. We will be in places where there is a market especially for our kind of offerings. We should gradually try to be among the top 30 from the current top 50 globally.

On targets from the merger

Increase the retail share in the portfolio from the current 54%. Our agri business and SME have been de-growing, which we should correct.

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