EY appointed to manage merger of three major banks

EY has been called in to help with the mammoth task of merging three major Indian banks – Punjab National Bank, Oriental Bank of Commerce and United Bank of India. The decision to bring the Big Four accounting and advisory firm on board was made by the anchor bank in the transaction – Punjab National Bank.

The merger is likely to throw up a plethora of complexities, indications of which are already present in the mechanisms that have emerged to facilitate the process. Committees with representatives from each of the merging entities have been formed to deliberate on how each vertical of the merged entity will function.

As many as 34 committees have emerged in this process, to manage various verticals such as IT, HR, and several others. All three banks have their individual suggestions for the future of these operational verticals, and EY has been tasked with managing these negotiations and finding a way forward.

“The anchor bank has appointed EY as a consultant. They will study the suggestion of each of the banks. If there are certain areas which need to be harmonised in tune with the industry, they will suggest that,” said Ashok Kumar Pradhan, Managing Director and CEO of United Bank of India.

Part of this process will be to bring a degree of uniformity and standardisation to the recommendations that are being made for different verticals. EY’s suite of responsibilities doesn’t stop there, extending to strategising on how the new entity should be branded and marketed following the merger.

In line with market trends, EY's consultants will also work on post-merger integration planning and on improving IT integration within the banks, a process that is expected to take at least a year.

The anchor bank for the merger is Punjab National Bank, although reports in the Business Standard suggest that the other two banks are seeking a new name for the merged entity.

In the HR department, meanwhile, considerable progress has already been made, with the banks making strategic personnel changes that would bring greater uniformity. EY will be looking to leverage its expertise in the reorganisation space to ensure that the merger runs smoothly in other departments as well.

The Big Four firm has worked closely with the banking sector amid a sea of changes that are currently underway. A mounting pile of non-performing assets drove the government to appoint EY and other major consulting firms to help with insolvency and restructuring processes. The latest merger is an extension of government policy to merge ten national banks into four with the aim of improving scale and efficiency.

Late in 2018, EY was also appointed to conduct a merger of similar scale and profile in the insurance sector. The firm is facilitating the merger of National Insurance Company, Oriental Insurance Company and United India Insurance Company.