Ex-GTB staff stare at pay cut

Oriental Bank of Commerce (OBC) is planning to lower the salaries of the erstwhile Global Trust Bank (GTB) employees in coming months. The bank has appointed an internal group which is working out the details.

"The group is working towards a deadline of this month end. We will then offer the OBC fitment to old GTB employees. We cannot maintain the private bank's much higher salaries. We have already done it for long enough," said H A Daruwalla, executive director.

Following the takeover by OBC, about 367 employees from GTB left the organisation.

Now about 800 GTB employees are left with us, said the executive director at the sidelines of a banking seminar here today.

GTB employees get almost a 40-45 per cent higher take-home salary than OBC employees do although the overall compensation package of officers of the same experience are almost on par.

OBC was asked to take over the sick private sector player in August 2004.

National Institute of Bank Management prepared a report to realign the salary structure of GTB with OBC. Said Daruwalla, "The report has suggested a case-by-case approach and we have decided not to go with that."

Oriental Bank of Commerce expects a 30 per cent rise in net profit in the fiscal year ending March 2006. The state-run bank, had reported a net profit of Rs 760 crore last financial year.

"Credit offtake continues to be very strong," Daruwalla. "Banks are also likely to increase lending to infrastructure." Oriental Bank expects its own credit growth in the current financial year to be 32 per cent, up from last year's 29 per cent.

OBC had stated in its red herring prospectus released ahead of its second public issue earlier this year that it expects the amalgamation to adversely affect its financial results for the remainder of fiscal 2005.

In addition, OBC may be further affected in the future, if there are any further weaknesses or additional non-performing assets and contingent liabilities from the acquisition of GTB.