CEO, BFSI News, ET BFSI

Mumbai: The merger of Vijaya Bank has given Bank of Baroda a lead in retail lending, particularly loans against jewellery, which rose 35% to be one of the fastest-growing segments last year. Bank of Baroda has also recorded nearly Rs 1,000 crore of savings following the three-way merger and is in line to achieve savings of Rs 10,000 crore over five years.

Bank of Baroda MD & CEO Sanjiv Chadha told TOI the lender completed the integration of 2,898 branches of erstwhile Vijaya Bank and Dena Bank with itself in December last year. Since then the bank has got the benefits of economies of scale and branch rationalisation. “There were 1,300 branches that were closed where there was an overlap, expenses on account of rent and taxes have come down in absolute terms,” said Chadha. He added that the merger has also reduced the need for fresh hiring.

Another cost-saving has been in interest expenses. “The ratio of low-cost current and savings account (CASA) deposits of the merging banks was lesser than that of standalone Bank of Baroda. As a result of the merger, BoB’s CASA dropped from 40% to 36%. We have not only retrieved what we have lost but moved ahead with a CASA ratio of 43%,” said Chadha. While Vijaya Bank’s business has given Bank of Baroda a leg up in retail, Dena Bank has consolidated its position in Western India particularly Gujarat.