The acquisition of Lakshmi Vilas Bank by DBS Bank from Singapore was a historic event as it marked the first time that a foreign lender took over an Indian bank.
In an interview with Surojit Shome, CEO of DBS Bank India, he shares his experience of managing the integration process and the challenges faced during that period.
In this article, we will discuss the process of the acquisition, the challenges faced during the integration, and the future plans of DBS Bank in India.
In November 2020, the Reserve Bank of India (RBI) made a decision to give the struggling Lakshmi Vilas Bank (LVB) to DBS Bank from Singapore.
This was the first time that an Indian bank was taken over by a foreign lender. Surojit Shome, the CEO of DBS Bank India, managed the integration and spoke about the challenges, choices, and circumstances he encountered during that period, as well as the significance of the acquisition for the bank’s future plans in India.
When a bank enters Section 45, the RBI determines which banks to approach. DBS Bank was one of the banks they contacted, given that they are a publicly listed company.
However, the RBI provided them with ample time to consult internally and with their home regulator, which took several weeks.
At the time, LVB had already been declared to have negative equity, and the RBI had initiated the process before Covid but had to pause due to the pandemic, which worked to DBS Bank’s advantage.
Once DBS Bank acquired the bank, they started by examining contracts and identifying areas of concern. They collaborated with an external partner to assess their capabilities and determine which individuals they wanted to retain.
They provided equal opportunities to all the employees and ranked them based on their performance. DBS Bank provided the talented employees with more responsibilities and decision-making power, making them ambassadors for the rest of the organization.
They equalized grades and salaries before implementing the pension plan. Currently, they use a single grade system, and they have expanded their business by adding another 2,000 employees.
DBS Bank did not treat the acquisition as a separate entity but integrated it into their existing businesses from day one.
After two years, DBS Bank has successfully migrated all their employees to a defined contribution plan, where they can withdraw their provident fund at the end of their employment and decide what to do with it.
They bore the cost of converting to the new plan and took a significant reserve in the last two years, which impacted their profits. However, they expect their profits to increase in FY23 after accounting for all these costs.
They have integrated all branches and technology into one system, although there may be some partial impact of integration costs from last year.
DBS Bank’s balance sheet now stands at over ₹1 lakh crore, with deposits of around ₹60,000 crore and assets of about ₹45,000 crore. They now have a single unified bank with 530 branches across 356 cities.
The acquisition of Lakshmi Vilas Bank by DBS Bank was a significant moment in the history of the Indian banking industry.
The successful completion of the integration and the migration of employees to a defined contribution plan are positive developments for DBS Bank’s future plans in India.
This is it for the day, We hope this article has been informative, and we encourage readers to share it on social media to help spread the word about this important event in the banking industry.
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