Is State Bank of India set for an overhaul in leadership?

The executive leadership of the State Bank of India might be in for some reshuffling with two new managing directors being appointed by the Bank recently. The bank promoted two senior executives B Sriram and VG Kannan as managing directors, and this could open up new opportunities for greater promotions within the company, the Economic Times reported. It further said almost six circle heads and chief general managers who had been promoted to managing director levels are now still performing their old duties till the positions of managing directors open up. The managing director and CEO of SBI Life Insurance has retired last month, and someone from the senior leadership will now have to take up that position as well.

Apart from the organic growth in the company, SBI has to figure out its inorganic structure and growth as well with much talk around about the merging of the subsidiaries with SBI.

The five associates of SBI are State Bank of Hyderabad, State Bank of Patiala, State Bank of Bikaner and Jaipur, State Bank of Travancore and State Bank of Mysore.

The government has already asked SBI Capital to prepare a report on merging smaller banks and subsidiaries with the Big brothers among public sector banks and required capitalisation for such a process. But it is not just the technical issues and fund problem that the government has to sort out.

According to various media reports, the SBI parent employees have higher salary than the subsidiaries and get both pension and provident fund. The employees in the subsidiaries get either of the two.

Second, since cutting down on the employee strength is not an option, the bank must find out an organisational structure that optimally uses its work force and is coherent as well.

Arundhati Bhattacharya, the chairman and managing director has herself said in an interview to a newspaper that the biggest problem in a merger is the HR. And if SBI decides to go for getting even bigger than it is today, she will have to take care of th most crucial part: the employees.

Finally, a problem that SBI will have to overcome is the issue of leadership. Every subsidiary has a leadership structure in place. There are key top executives in the bank who are set to retire in a short while, and there are many who have been given promotion or are due for it, but the role change has not taken place effectively as yet.

SBI will have to carefully break down the leadership structure and use to new leaders from the merged subsidiaries in an optimal manner.

All this is easier said than done. The government recently said it wants to cerate five banks that become too big to fail. SBI must take care that it does not become so big that it fails.