SMP Bank may be merged with PSB by the beginning of 2024

SMP Bank may be merged with PSB by the beginning of 2024. Thus, it will become the fourth credit institution consolidated by the main bank of the OPK in 2023. Integration will require optimization of staff numbers and branch networks.

PSB plans to merge SMP Bank by January 1, 2024, a source in the financial market said and was confirmed by Kommersant’s interlocutor familiar with the situation at the bank. At the end of 2022, PSB completed the acquisition of the bank from the previous owners, the value of the asset amounted to 46 billion rubles. (see “Kommersant” dated December 30, 2022).

One of Kommersant’s interlocutors notes that for the integration of PSB to be effective, “large-scale optimization” will have to be carried out.

“In the case of SMP Bank, it will be necessary to reduce at least 50% of the staff, since the regional network of the bank was aimed mainly at attracting deposits from the population,” he believes. The final percentage reduction may be even larger, admits another Kommersant source.

As of mid-2021, the average headcount of SMP Bank was 2.38 thousand people, while PSB had 12.7 thousand people at the beginning of 2020. Credit institutions did not publicly disclose later data on the number of employees.

The preservation of the network of SMP Bank branches is also in question, notes Kommersant’s source. In total, according to the Central Bank, the bank has 76 additional offices and seven branches. The PSB network is much wider: 812 additional offices, about 10 branches and 5 mobile offices.

PSB confirmed to Kommersant that “the preliminary merger of SMP Bank is scheduled for January 1, 2024, which will allow the integration process with PSB to be carried out in the most comfortable and seamless manner for clients.” “As a result of the merger, the bank will receive new clients in the SME and retail segments and increase its corporate portfolio,” PSB added.

As for personnel cuts, when making decisions in this direction, the PSB “will focus on the possibility of optimizing overlapping management and service functions.” Optimization of the network, the bank clarified, is “under development” and will primarily depend “on the representation of each bank’s offices in a particular region, the demand for certain branches from clients and the workload of the offices.”

If the merger of SMP Bank takes place within the specified period, then PSB will consolidate the fourth bank this year.

In the spring, the group integrated the Minbank, and in the summer the State Bank of the LPR and the Central Republican Bank of the DPR were merged.

“As a rule, to manage the integration process, a cross-functional project office is assembled, coordinating processes in all key business functions,” explains Stanislav Zingirevich, head of the integration and business division group at Kept. “The sooner such a team gathers and gets involved in the process of planning the joint life of the two banks , the more effective the integration itself will be.”

“A merger, as a rule, aims to optimize the branch network and personnel, including by reducing duplicate administrative functions,” notes banking expert Olga Ulyanova. She calls the reduction of a third of the total administrative costs of the merging bank a “quite reasonable expectation.”

At the same time, the expert draws attention to the fact that often optimistic forecasts about savings do not in reality justify themselves. For example, explains Ms. Ulyanova, when dismissing staff, it is necessary to pay severance pay, which increases costs one-time, and the reduction of overlapping branches can take time.

Olga Sherunkova