MERGER MANIA VIII BY S.

SRINIVASAN PRESIDENT NATIONAL UNION OF BANK EMPLOYEES (NUBE) Bol, ke lab azaad hai tere: Bol, zabaan ab tak teri hai, Tera sutwan jism hai tera Bol, ke jaan ab tak teri hai. Dekh ke ahangar ki dukaan mein Tund hai shule, surkh hai ahan, Khulne-lage quflon ke dahane, Phaila hare k zanjeer ka daaman. Bol, ye thora waqt bahut hai, Jism o zabaan ki maut se pahle; Bol, ke sach zinda hai ab tak Bol, jo kuchh kahna hai kah-le! Speak, your lips are still free. Speak, your tongue is still yours. Your strong body is still your own, so speak, while your soul is still yours. See how in a blacksmith's shop, the iron is red, and in the flames' heat all the locks begin to open their mouths; all the chains disperse. Speak! This little time is so vast, before the death of body and tongue. Speak: truth is alive, even now. Speak. Say what you must.

-Faiz Ahmed Faiz

COMMEDY OF CONTRADICITONS Consolidation Diagnosis : Constipation of Thought & Media Diarrhea India, the second largest populated country, has total 77 banks including 27 public sector banks, 20 private banks and 30 foreign banks. But still more than 40% of the adult population in India does not have access to banking services so the need to expand coverage is obvious. A large part of the sector is government-owned; most major banks were nationalized in 1969. But a significant jump in coverage means large investments and the government doesn't have the money. Nor is it ready to dilute its stake. It is ironical that government says doesnt have the money. On one hand the government is talking about consolidation of pubic sector banks which will result in closure of many public sector banks branches, on the other hand it is talking about giving licenses to corporate to setup new banks. The rhetoric often peddled for consolidation is that, this huge Indian universe has not clinched any significant global footprint supporting their arguments they state Country's largest lender - the State Bank of India (SBI) ranks 60th globally in 2012 in terms of tier I capital (equity + reserves). The second largest bank (in terms of loan book) ICICI Bank 's position is way below at 110. Among top 200, four more banks including HDFC Bank , Bank of Baroda , Canara Bank and Punjab National Bank managed to find their ranks. Financial inclusion or basic banking service for every Indian seems to be the motivating factor for expanding banking reach. According to Government and their sponsored experts, consolidation should be the ideal solution to it, not new banks. "There is no substitute for consolidation in PSU bank many CEOs of public sector banks air in most the forums. The reason they quote often is "Indian companies are spreading their tentacles by acquiring companies abroad. For funding cross-country acquisitions Indian banks should acquire size and sophistication. State Bank of India is considered to be small fry in the global banking arena. Despite cornering about 25 per cent of the banking business in the country, SBI does not rank in the top 20 global banks. Ideally, India should have 4 or 5 global-

scale .many of them have suggested road maps for consolidations. , some small public sector banks) have not been able to show a healthy performance. They are even hesitant to act as a lead bank and are content with being a consortium member . The need of the hour is merger of small banks to emerge into large entity (ies). If the mergers can address this issue and give some relief to the government, it would be an added advantage, besides ensuring other synergies in scale of business, even geographical spread (branch concentration) and lower NPAs of the merged entity According to one CEO s once all SBI subsidiaries are merged SBI, it would be among the top 10 banks in the world in terms of various parameters. According to another CEO of a public sector bank the mergers can address this issue and give some relief to the government, it would be an added advantage, besides ensuring other synergies in scale of business, even geographical spread (branch concentration) and lower NPAs of the merged entity. He had even suggested the following market considerations for possible mergers

Allahabad Bank, Central Bank, Corporation Bank and P&S Bank projected to be the fourth largest

Canara Bank, Indian Bank, BoM, IOB and United Bank of India projected be the second largest bank

SBI, BoI and BoB - projected to be among the largest banks in the world

PNB, Vijaya Bank, Andhra Bank and IDBI - projected to be the third largest

 OBC, Syndicate Bank, UCO Bank and Dena Bank - projected to be the fifth largest The process of issuance of licenses to corporate to start new private banks was started by former Finance Minister Pranab Mukherjee in his February 2010 Union Budget. But the RBI has been dragging its feet: It issued draft guidelines in August 2011, invited comments and the matter has rested there ever since. The RBI's major objection was that it didn't have enough powers to regulate the new banks. The agency could remove an errant director, but if an entire bank board connived in a fraud, it was helpless. Now Chidambaram has taken away that excuse: The Banking Laws (Amendment) Bill, which gives the RBI more teeth, was cleared by the Lok Sabha (the lower house of Parliament) in December 2012, as a part of the government's new reforms package. The RBI's reluctance stems from one major reason: large industrial groups are now allowed to acquire banking licenses. One of the key reasons for the nationalization of banks was that many were controlled by large business groups that used public deposits to finance their own businesses. There were no Chinese walls and widespread allegations of misuse of funds. And the RBI is not alone with its reservations. "One of the real problems in the financial sector is that there are issues of conflict of interest," Nobel Laureate Joseph Stiglitz said while delivering the C.D. Deshmukh Memorial Lecture in Mumbai recently. "And when you have corporates owning their own banks, you are opening up a venue for corporate conflicts of interest." C. Rangarajan, chairman of the Prime Minister's Economic Advisory Council, has also advised the RBI to put licenses for conglomerates on the backburner. The first choice should be applicants that are not part of big groups, and only when these aspirants are found wanting should the RBI look at corporate, Rangarajan told the Press Trust of India. The International Fund has also warned the RBI against allowing corporate entities into this area.

After protracted debate and After a span of around 10 years RBI is set to issue fresh banking license. In 2003-04, it had last issued license to Yes

Bank and Kotak Mahindra Bank . Prior to that, the central bank had introduced the first round of licenses to 10 private sector banks. The Reserve Bank of India recently fueled enough optimism for India Inc, mostly bruised with economic blues. They can now apply for a new banking licence. The central bank released guidelines for the same. Corporate CEOs were vying each other in airing their voices to stake claim as potential candidates. Is it the need of the hour? The RBI guidelines give some criteria for eligibility, including that the entity applying for a license must have "diversified ownership, sound credentials and integrity" and a successful track record of at least 10 years. Groups with significant interests in real estate and capital market activities, which, according to the RBI, "apart from being inherently riskier, represent a business model and business culture [that] are quite misaligned with a banking model," will not be entertained. The guidelines put the initial minimum paid-up capital at Rs. 500 crore (US$92 million) and restrict foreign shareholding in any form to 49% for the first five years. (Private banks in India can have up to 74% foreign shareholding today.) The guidelines also stipulate that 25% of the branches must be opened in unbanked rural centers and applicants should conform to meet the "fit and proper criteria". However The final guidelines by the Reserve Bank made a climb down from the initial stance, which in the draft norms issued in August 2011, had virtually barred Realtors and brokerages from its eligibility criteria. "There are certain activities, such as real estate and capital market activities, in particular broking activities, which apart from being inherently riskier, represent a business model and business culture which are quite misaligned with a banking model," the draft guidelines had said.

But who are the new entrants likely to be? Given the RBI's reluctance to issue licenses to big business houses, those firms may not make the cut this time. The frontrunners appear to be IDFC and L&T Finance, according to a report by Credit Suisse. The stock markets seem to agree. IDFC is now close to Rs. 180 (around US$3.29) against a 52-week low of Rs. 94 (US$1.72). L&T Finance has more than doubled to reach Rs. 95 (US$1.74).The big business conglomerates that want a piece of the action also include the

Aditya Birla Group (Aditya Birla Financial Services), the Tatas (Tata Capital), the Ambanis (Reliance Capital), Bajaj (Bajaj Finserv) and the Mahindras (M&M Financial Services). Others include engineering giant Larsen & Toubro (L&T), SKS Microfinance (the only listed microfinance company), Life Insurance Corporation and Infrastructure Development Finance Company (IDF) Many the prospective players have opposed the Problems of Going Rural. That regulation according to them in particular makes matters more difficult. As businesses penetrate the rural areas, the personnel costs become too high compared to the business generated. As fast-moving consumer goods (FMCG) companies have discovered, the salary of one person is often higher than the profits generated by a whole cluster of villages. "If the new banks are expected to do business with a client segment that is much less remunerative, it is going to put a larger burden on them," notes a, director of PricewaterhouseCoopers (PwC) India. "As it is, there is a lot of competition and stress on the system where the larger players are concerned. The private-sector banks cannot afford to have a financial inclusion piece that does not lead to a profitable business model. They have to put the two pieces -- financial inclusion and profitability -- together. It cannot be one at the cost of the other -- which is how public-sector banks have always functioned. Coming in the backdrop of the 2G spectrum scam, which was the outcome of a clearly stated and far more detailed set of guidelines than what the RBI has released after three years of consultation, one can only infer that the central bank has either learnt nothing from the unfolding and explosive governance challenges in India or it somehow believes that its reputation and influence over large corporates through the banking relationships that it oversees will force unsuccessful applicants to remain silent even if they have been dealt with unjustly. Even if banking licenses are not a scarce natural resource, the limited numbers attach a massive financial value to the permission to operate. There is, therefore, every reason for corporate to exploit those portions of the decision-making procedure that are open to discretion, influence and interpretation.

Many financial advisory firms opine that Consolidation is more important than having more banks . Recently in an interview the deputy governor of RBI Mr. Chakrabarty, When asked about the number of licenses that may be issued, the senior most deputy governor said the number of new banks will depend on the eligible candidates and it is too premature to give a specific count now. "First, let's see how many people are eligible, how many are fit and proper. If no body is fit and proper, then what is the use of giving licenses? This is all too premature...(to talk about the number of licenses to be issued the dy governor. said. On consolidation in the banking sector, Mr. Chakrabarty said the RBI may come up with a paper addressing the concerns. If we are talking of new banking licenses, then dont talk of consolidation. These are two contradictory things. Consolidation is a defined issue. Some paper will come out that may be addressing some of these issues, he said(PTI Feb 26, 2013) This shows that inconsistencies and contradictions inherent in statement of government and even reserve bank time to time on what should be prioritized : consolidation, financial inclusion, and new bank licenses ? India's Finance Minister, P. Chidambaram, wants more banks. So does the country's banking community and the financial sector but in the same breath the government says government doesn't have the money. They state there is a need to rope in private entrants to motivate financial inclusion. And the regulator in charge of authorizing new financial institutions -- the Reserve Bank of India (RBI) -- seems to be finally ready to open the floodgates. as mentioned above by the Dy.Governor of RBI financial inclusion, branch licensing to corporate and consolidation are contradictory . Added to this comedy of contradictions The most eye-catching is the proposal marking election 2014 for a public sector bank for women to be run by women, with a startup capital of Rs. 1,000 crore. The reason for the government recommending issuance of new licenses to corporate as argued by the government before is due to significant jump in coverage new branches to augment financial inclusion which necessitates large

investments and that the government doesn't have the money. Nor can the government to dilute its stake. But new banks are therefore a must. But in the budget speech the FM has enough money for opening up Rs1000crore capital women public sector bank. mark these comedy of fascinating contradictions and pronounced inconsistencies, which we call it as Constipation of Thought& Media Diarrhea . Its official. Women are the new vote bank, it seems. Finance minister P Chidambarams last budget before the general elections next year lined up a slew of measures to help women, showing that gender is increasingly becoming a factor in electoral politics. The ministers 105-minute speech used the word women in the plural 24 times and in the singular, four times. The word gender occurred three times, girl four times and female once leaving little to imagination on an emerging electoral priority of the UPA government as it bets on inclusive growth. Taking potshots at the all womens bank proposal, A twitter has rightly remarked Chidambaram announces setting up an all-women bank. So be ready to see a bank with mirrors, makeup kits and a shopping. Women are someone whom men can bank upon. This sums up the feeling of Indian woman who expected some directtaxation linked relief and women banks(euphemistically vote banks !) in the budget which flattered.... only to deceive once again. The banking industry will need to hire 9-11 lakh employees over the next five years, according to a report by Boston Consulting Group. Retirements in public sector banks will continue to increase and peak by 2017. In total, 1.8 lakh employees will retire and will be replaced. Depending upon the productivity growth, the industry will need 2.5-4.5 lakh additional people for growth in business. Partner & Director, BCG, said Public sector banks will have to double the current intake of employees to meet the talent needs of future. unable to retain recruits and talents due to abysmally low salary structure compared with peers the FM in the budget 2013 has assured All public-sector banks have will all have ATMs in their branch areas by 2014and Banking correspondents will be allowed to offer microinsurance products to customers.. In other words the FM agreeable to increase capital expenditure in inanimate such as ATM and not on animates and more reliance on flexible and contract labor than need based permanent recruitment and adequate manpower planning arising on account of massive retirements in four years. In plain terms the FM hints job cuts in public sector banks to speed up consolidations.

Hence in our opinion Budget 2013 has been prepared to please investors, not to fuel growth, employment and incomes. Budget 2013 continues with the tradition of presenting numbers that have no value other than what a short-sighted capital market wants to read into them please foreign investors and international credit rating agencies. It is perhaps more than time to downgrade the importance accorded to this annual number-crunching exercise. No other large country, developing or developed, gives so much attention to the presentation of a budget, which in Indias case is all smoke and mirrors. This is not the end of conflicting and confusing statements on budget, consolidation and financial inclusion/licenses to corporate. These comedies of errors will continue Banking Amendments The UPAs second stab at paving the way for an expanded presence of domestic and foreign private capital in the banking sector and the dilution of government ownership of public sector banks has moved one step forward, though after a compromise. The Lok Sabha has passed a revised version of the draft Banking Laws (Amendment) Bill, 2011 in which clauses allowing banks to engage in commodity futures trading and exempting the banking sector from scrutiny by the Competition Commission of India (CCI) have been dropped. But there is much else that remains controversial in the bill, against which three bank employees union, AIBEA, BEFI, NUBE and one officers association AIBOA had decided to strike work on December20,2012. In fact, when the Finance Minister sought to take up discussions on the bill in Parliament on December 11, the opposition stalled proceedings and demanded that it be referred back to Standing Committee on Finance the views and recommendations of which had been largely ignored in the draft. This occurred despite the fact that in an effort to neutralise the opposition, Finance Minister had met and solicited the support of the two leaders of the opposition, neither of whom has displayed a strong distaste for banking liberalisation. Much of the opposition, while crossing swords with the UPA on this issue for political reasons, does not oppose the essential objective of the bill, which is to pave the way for consolidation in the banking sector under the aegis of a few domestic and foreign entities. There are a number of crucial

changes relating to bank ownership and control that the amendment bill proposes. First, the draft amendment bill as introduced in Parliament seeks to drop completely Section 12 (2) of the Banking Regulation Act 1949, which states: No person holding shares in a banking company shall, in respect of any shares held by him, exercise voting rights on poll in excess of ten per cent of the total voting rights of all the shareholders of the banking company. Scrapping this ceiling of 10 per cent on individual voting rights would permit those shareholders holding a stake in excess of 10 per cent to exercise voting rights proportionate to their shareholding. Because of opposition to the clause the bill as finally passed has decided to move one step forward, while retaining a restriction on voting rights that is below the ceiling on equity ownership. It states, in sub-section (2), the following proviso shall be inserted, namely: Provided that the Reserve Bank may increase, in a phased manner, such ceiling on voting rights from ten per cent to twenty-six per cent. This may seem altogether appropriate. But the original clause has served to ensure diversified ownership in private sector banks, which is crucial since a bank is set up with minimal equity when compared with the deposits it mobilises from the public at large. Expanded equity ownership would allow powerful shareholders with a small absolute stake to control a banks operations and use depositors money to advance their own interests or engage in speculation. It was only with liberalisation, especially during the years since 2005, that individual or groups of related shareholders have been permitted to acquire significantly more than 10 per cent of total equity in private banks. Second, the amendment bill seeks to revise a similar provision relating to public sector banks under the Banking Companies (Acquisition and Transfer of Undertakings) Acts, 1970 and 1980. As per Section 2E of that Act no shareholder in a public sector bank, other than the Central government, be entitled to exercise voting rights in respect of any shares held by him in excess of one per cent of the total voting rights of all the shareholders. The amendment bill seeks to raise this voting right limit to ten per cent. Third, the amendment bill seeks to render subject to RBI approval such acquisition of shares by any person acting by himself or acting in concert with any other person, shares of a banking company or voting rights therein, which acquisition taken together with shares and voting rights, if any, held by him or his relative or associate enterprise or person acting in

concert with him, makes the applicant to hold five per cent. While giving the RBI the right of approval the bill makes the process of acquisition of an influential stake in a bank transparent, it also provides the central bank the right to permit such acquisition on a range of grounds varying from public interest or the requirements set by international best practices. Without legislative limits a policy of permitting private majority ownership would be easy to implement when decided on by the government. Finally, the earlier draft version of the bill had proposed that when mergers and acquisitions occur, resulting in combination and possible consolidation, the process should be kept outside the purview of the Competition Commission. According to the original amendment bill, nothing contained in the Competition Act, 2002 shall apply to any banking company in respect of the matters relating to amalgamation, merger, reconstruction, transfer, reconstitution or acquisition. In essence, if as a result of approvals granted by the RBI (whether influenced by the Finance Ministry or not) a process of consolidation begins, that would be unstoppable. Fortunately this change has been blocked and the clause dropped, though the effort to allow mergers without scrutiny is bound to continue given the UPAs obsession with creating two or three banks comparable in size to leading global banks. The implication of these moves is clear. While the revisions discussed above are embedded in an amendment bill that also seeks to strengthen the RBIs regulatory control over cooperative banks and such other institutions, the former rather than any other revisions being proposed define the principal objective of the bill. This is indeed a major shift in policy reflecting the victory of the liberalisers in government over the regulator (the RBI). It is important to recall here the earlier view of the Reserve Bank. The RBIs Report on Trend and Progress of Banking in India, 2003-04 (Chapter VIII: Perspectives) states, The concentrated shareholding in banks controlling substantial amount of public funds poses the risk of concentration of ownership given the moral hazard problem and linkages of owners with businesses. Corporate governance in banks has therefore, become a major issue. Diversified ownership becomes a necessary postulate so as to provide balancing stakes.

An instance that illustrates the conflict between the RBI and the government in the past is the saga surrounding a relatively small bank, the Catholic Syrian Bank (CSB). In 1994, Surachan Chansri Chawla and his Bangkok-based Siam Vidhya Group, had acquired 36.18 per cent equity in Catholic Syrian Bank. This private transaction between Chawla and the bank was subsequently approved by the bank's board. The proposal for the acquisition of a stake in CSB by the non-resident Chawla was also approved by the Foreign Investment Promotion Board (FIPB) and the Cabinet Committee on Foreign Investment in early 1997. However, the RBI rejected the Siam Vidhya group's request to transfer the bank's shares to its name. This was because, under the bank ownership norms of the regulator, no single entity can hold more than 10 per cent of total equity in any Indian bank. They were then held in "trust" by the bank and Chawla challenged the decision in court. After much litigation, the Supreme Court had directed the RBI to grant permission for the transfer of shares to the group subject to the condition that it would divest 26.18 per cent shares, after retaining about 10 per cent with it, on or before August 1, 2008. Following the directions of the Supreme Court, the group did divest its excess stake after some delay. In recent years the government has in a number of cases allowed the acquisition of equity in excess of 10 per cent by single investors in some private banks such as ING Vysya. The amendment being proposed would thus serve multiple purposes. One would be to legitimise prior holdings of more than 10 per cent equity and permit these investors in private banks to exercise voting rights proportionate to their stake. The second would be to permit acquisition of other private banks by new investors, domestic and foreign, on the grounds that these banks need to mobilise capital to strengthen their capital base, to meet the revised Basel III capital adequacy norms. And, the third would be to gradually apply the same principle to the public banks, in whose case spokespersons from both the government and the RBI have declared that they need to go to market to raise additional capital. In sum, the objective of the bill is clearly to permit new entry, consolidation and expanded foreign presence in a sector that is the repository of much of household saving in the country. For the government the process of freeing entry and control in the banking sector has been a long and painfully slow process. It began as far back as 2004 when the Ministry of Commerce announced a set of decisions with reference to foreign investment in the banking sector, which set the cap on

foreign equity in Indian banks at 20 per cent in the case of public sector banks and 74 per cent in the case of private banks. Consequent to the Ministry of Commerce announcement, the Reserve Bank of India issued a comprehensive set of policy guidelines on ownership of private banks on 2nd July 2004. These guidelines stated among other things that no single entity or group of related entities would be allowed to hold shares or exercise control, directly or indirectly, in any private sector bank in excess of 10 per cent of its paid-up capital. Recognising that the earlier 5th March notification by the Union Government had hiked foreign investment limits in private banking to 74 per cent, the guidelines sought to define the ceiling as applicable on aggregate foreign investment in private banks from all sources (FDI, Foreign Institutional Investors, Non-Resident Indians). However, in the interests of diversified ownership the 2004 guidelines had declared that no single foreign entity or group could hold more than 10 per cent of equity. There was also a 10 per cent limit set for individual FIIs and an aggregate of 24 per cent for all FIIs, with a provision that this can be raised to 49 per cent with the approval of the Board or General Body. Finally, the 2004 guidelines set a limit of 5 per cent for individual NRI portfolio investors with an aggregate cap for NRIs of 10 per cent, which can be raised to 24 per cent with Board approval. In keeping with its more cautious policy, however, the RBI decided to retain the stipulation under the Banking Regulation Act, Section 12 (2), that in the case of private banks the maximum voting rights per shareholder will be 10 per cent of the total voting rights. The 10 per cent ceiling on equity ownership by a single foreign entity was partly geared to aligning ownership guidelines with the rule on voting rights. Moreover, there is a cap on voting rights for individual investors set at 10 per cent for private banks and 1 per cent for public banks. This is the policy that the government has sought to change since 2005 and to legislate into law. It has now partially succeeded. The major opposition party through its former Finance Minister Yashwant Sinha found a rather less significant and dilatory reason to demand the return of the bill to the Committee on Finance. The bill if passed, he argued, will allow banks to trade and speculate in commodity futures markets. But that is hardly the main thrust of the proposed amendments to the banking regulation act of 1949. So the government partly relented and dropped a couple of clauses, in order to push through a bill that would substantially liberalise regulation of the banking sector.

Merger of Banks: It has been widely reported about the proposal to merge some of the PSU banks (Nationalized banks). These merger has been proposed by the government, specifically our Finance Minister P. Chidambaram. In the annual banking summit, the finance minister reiterated this by saying that banks should not fear consolidation and that for being a world economic super-power or for at least being one of the three largest economies, India. The centre is nudging the capital infusion demand by the state-run banks with demands for mergers as these mergers would considerably bring down the liability on the centre for capital infusion. Currently the centre has a commitment of Rs 15888 crores of capital infusion towards state run banks to maintain the financial health of the state run banks. Over the next five years it would have to take the burden of another Rs 90000 crores for the same. The justification of the need for large global sized banks given by the centre was that these banks could have a larger asset base as their exposure to various sectors would be widened and their scope for financing bigger and larger projects would undoubtedly increase. Certainly the centre is adopting the policy of looking towards the west and drawing some inspiration out their ways. In the financial debacle of 2008, the world has witnessed how the so called global banks of USA and Europe are still gasping for breath. Ultimately many of these financial institutions and banks had to be taken over by others or had to be bailed out by the government through the respective central banks by providing grants and soft loans. Even the biggest of banks in the world, Citibank, was not spared by the recession. The state of these banks were as a result their own making and not because of circumstances that they had to bear the brunt. Indian banks have a large customer base and undoubtedly large amount of public money is involved. A larger loan exposure would only put the public money in unsafe domains. The more fragmented the banks are, the lesser will be the exposure w.r.t. to size, thus making public money secure. We have already seen how the banks are reeling under pressure because of their exposure to the aviation, power generation, infrastructure, mining and agriculture sector. The banking sector is the pulse of the economy and decisions should be taken by keeping the long term implications in view. Even the slightest of jerks in trying times

could prove fatal for the economy. Further more in this regard, these proposals are being mulled upon to create 2 or 3 global sized banks. Without doubt, the sizes of banks are being compared by keeping in view their loan books and their asset base. But what the minister is forgetting is that we got to compare apples for apples. If we are to compare the size of our banks with that of the US, converting our financials in terms of dollars and making a pie to pie comparison would be utter foolishness. With my limited knowledge of economics and with due respect to our finance minister, it isnt rocket science to understand that what 1 dollar means to an American is not what 1 rupee means to an Indian. We got to factor in the purchasing power of both the currencies in their respective economies for the corresponding average citizen of that country before making any comparison. Appropriate weightage should be given to this aspect in any exercise of comparing size of banks in each of these economies. Moreover it will be pertinent to note that the penetration of the Indian banks by their sheer enormity of the reach their customer base is something unparallel world over (SBI being the case in reference). One has to definitely give due consideration and weightage to this fact and not merely be guided by size of loan book and enormity of asset while considering the size of a bank. Thus all these points all the more make it unreasonable and unfavorable for the centre to even think about merger of banks. Apart from all this, the points being raised by the respective unions of all these banks are also to be considered before making any commitments. It would amount to nothing but digging our own grave or to put it more bluntly we would be cutting the hands and legs of the workers who built our very own TajMahals upon which our economy is sustaining and I sincerely hope that our finance minister wouldnt want to take the wrath of being termed as Harahan who made all this happen. Another very important point of consideration is the proposal of divestment of the PSUs including the nationalized banks. No doubt it is impertinent that the government meets its fiscal demands and divestment of holdings is one of the most easiest and non-cumbersome ways to meet this end. But the unique, never-before tried out model which the centre plans to adopt in the process of divestment is alarming. From what we understood of what was reported in this end is that the centre plans to sell the stakes of these Banking and other PSU stocks to selected Asset management companies (AMC) and mutual funds, and these mutual funds AMCs in turn would create a special category of securities where in these securities would derive their value from the value of the basket of these PSU stocks. These securities thus created would be issued to the public as units of exchange traded funds (ETFs) listed

in the stock market through these mutual funds in the name tradable listed ETF units. The fact that the underlying value of these securities would be derived from that of the PSU stocks which are listed in the exchanges would garner a lot of interest in the common public, who are generally unaware of the ways of the market. This would be so because it is generally understood that PSU stocks are considered to be safe havens of investment for the common man and has a huge upside as it linked to the economy. India being projected as the next big economic super-power and a force to reckon with would furthermore add to such an understanding of the public. Keeping the present proposal in mind, the only earnings out of the securities that the mutual funds and AMCs would issue would be out the dividends that the companies (underlying stock/PSUs) declare and the capital appreciation of these stocks. How often would these companies declare dividends is a question which only time can answer and whether these stocks would ever see any capital appreciation is a question which can, to a large extent be answered by us. Such a possibility is certainly shady. Because the catch is that, the stocks of these public sector undertakings most of which are already listed in the exchanges do not reflect their true price. Their values on the exchanges are not reflective of their true value which ideally should be ascertained by market forces. It was already very well seen how the market reacted to the offer for sale of a few PSUs which were divested. Even though those stocks were being offered at a discount it did not garner much interest. There was hardly any buying for the better part of the period of the trading window. Towards the fag end of the trading window, it was LIC which took a lions share of the offer for sale, thus being a saving grace for the government. Seasoned Market players probably knew about the intricacies of these stocks. And that is why it did not garner much interest even though it was being offered at a discount. Even in the case of the proposed divestment of PSUs through AMCs it would is highly doubtful that it would see an upside resulting in capital appreciation since the values are already fabricated. The reasons for such artificial prices are the low public holding or free float of many these shares. Probably the government does not want to face the same situation and that is why they have devised this new structure where in a mutual fund AMCs would act as an intermediary between the divesting government company and the common public. Ultimately the fiscal needs of the government would be satisfied, the mutual funds would have made their money but it would be the common that would have lost their hard earned money. The average middle-class and those planning for their retirement would without hesitation enter into such a fund. And after a few quarters of capital stagnation when they decide to encash out of it they

are bound to face the road block of not even fetching the face value/ purchase value of the units held by them thereby leading to a downward spiral in the value of these units when these mutual funds face redemption pressure. This is the same model which was the prequel leading to the November 2008 financial debacle where the securities, which derived its value from underlying sub prime loans, were being issued as highly secure and AAA rated securities to the average American. They innocently entered such funds as a lucrative substitute for pension funds and got trapped. Furthermore, the next initiative which the government plans to take in the bid to open up the economy and make reforms is the opening up of the pension sector. The dual combination of opening up of pension funds and allowing pension funds larger freedom to invest in equity and equity based securities and the so called seemingly innocent act of offering these ETFs which has the wide acceptance and belief of being safe simultaneously by the government is the most dangerous cocktail which has the potential of leading to catastrophic results which is likely to affect scores of millions of unassuming individuals, especially senior citizens and pensioners, the most vulnerable of any society. In order to understand the incentive driving the ministry of finance and the various interests pushing it, it is useful to distinguish between the activities of banks as seeding-cum-cultivating agents and as harvesters on the one hand, and the activities of modern banks as overtime seekers of interest from customer activities, and their activities as point-of-time earners of fees. Bank mergers, like many other types of liberalization directed at increasing the wealth of rich shareholders has been a tsunami originating in the activities of US financial corporations. Their role has been that of a harvester of fruits of other institutions seeding and nurturing activities, and of looking for product lines involving fees for point-of-time services rather than of durable customer servicing activities. They generally provide usual banking services only to an elite band of up-market customers with whom they have sought to build close relationships. The 2008 global financial crisis, resulted in the threat of total collapse of large financial institutions, the bailout of banks by national government. The irony has not been lost on those in the banking industry in this country. Former Prime Minister Indira Gandhi was roundly condemned by the US and other Western powers when she nationalized banks in our country in

order to ensure that credit reached the poor and powerless. Deemed to be a socialist - or communist-like measure -, it has now been adopted without any qualms by the avowed world leader of free market economies. It seems the US government had little choice, as otherwise widespread mayhem may have resulted for the average citizen both within US and abroad. Clearly the rules of the game change for Western economies during crisis. Nationalization can be resorted to when the American people need to be protected but the same measure can be decried when a developing economy needs to do so to similarly protect its far more impoverished citizenry. While day in and day out, the Finance Ministry is assuring the people in the context of global financial crisis that Indian Banks are safe, but they should be honest enough to emphasize the truth that 85% of the Banking in India is done through Public Sector Banks and it is because of Nationalised Banks that the crisis has not engulfed in Indian Banks. Have government forgotten the social objective of banks completely? Is it possible for a government to survive by discarding the interest of common- men, farmers, small traders in India? Is it necessary for India to have bigger banks to extend credit to farmers and small traders who together constitutes 95% of population and without whose support even economic viability of large projects would be at stake? It is important to mention here that there is sharp rise in loan portfolio or visible growth in advances of banks in general is not due to financing made by banks to small traders and farmers but only due to bulk financing made to big corporate houses, to real estate developers and to infra structure developers. Does any one in the government or in RBI mean that by merger and enhancing powers of banks, there will be equitable GDP growth in country like India? Even in America where big banks are many, one out of every seven Americans starves and struggle for earning their bread and butter for at least survival. In India the position is worse than that in USA. In India nine out of every ten Indians are unable to earn sufficient money even for respectful living. Considerable large proportion of Indian population is suffering from mal-nutrition; they die of curable diseases in want of proper medical

assistance and they remain unemployed in want of adequate opportunities. This is India where even federal structure of the country is at stake due to largely growing unemployment. Besides in majority of villages, small towns and cities there is no proper sanitation facilities, acute scarcity of water and electricity, crisis for medical treatment and what not. This is why I reiterate that Indian environment is different from other developed nations and hence need unique treatment. It is worthwhile to add here that USA government have realized after fall of big banks and financial Institution during last year that management of big banks is very difficult compared to smaller ones. Still there are about 8000 smaller banks functioning in USA to serve common men. It is also true that 125 banks became bankrupt or closed their shutters during the current year in USA. If we talk of India we have less than 30 public sector banks and they are said to be in better health position. They are well scattered in every nook and corner of the country to serve Indians in general. They have to be encouraged to extend maximum help to small borrowers. They cannot extend any better help to poor person after merger of banks. Then what is the need of merger and acquisition? Why is government bent upon merger Need of the hour is to make them able to cater to the needs of common men. Even if we leave aside the social objective, it is not commercially proposition to build pressure (frequent request by FM or RBI is enough to build pressure) on banks to go for merger and acquisition especially when government have granted economic freedom to individual banks in the era of economic reformation, liberalization and globalization When need will arise banks will themselves strive hard to grow bigger to survive. As of now banks in India are said to be safer than foreign banks. Even government has admitted it repeatedly. Need of the hour is to strengthen the existing structure of banks, make them more and more efficient and enthusiastic. Government should make efforts for repayment of loan and for this purpose make water tight laws to ensure cent percent recovery of loan from willful defaulters so that proportion of dead money in banks balance sheet comes down and they can afford and generate will to make finance to common men. Present scenario is that branch manager of every banks branch is afraid of extending credit to small borrowers in fear of account going bad and lastly added to Non Performing Asset. Need of the hour is to avoid political intervention in banking affairs and to resort to healthy norms for

financing without any fear of target achievement. To add fuel to fire every banks are suffering from staff shortage and as a consequence there is no monitoring on existing borrowal accounts and gradually service quality in banks at many branches is deteriorating in want of adequate staff. Banks are even unable to redeploy the existing surplus staff at Metro branches due to protest from powerful employees union. Last but not the least; bitter truth is that big business houses are getting all sorts of help from the government, from the banks and from all corners but all at the cost of poor and middle family. Rich business houses are producing, hoarding and realizing maximum profit on their products and it will not exaggeration to say that the present trend of rising price is caused by these profit makers only. Government has been making promises and promises to control price, but always fail on this front because they have given undue freedom and undue privileges to these business houses. I hope government will make all best efforts to give relief to general mass who are subjected to unbearable pain on account of sharp price rise in all commodities without proportionate rise in their monthly in Can merger and acquisition by banks help in ameliorating their problems of poverty ridden Indians? I would like to draw the attention of learned FM and PM that late Indira Gandhi (Congress Party) had nationalized banks because private banks were hesitant to extend credit to common men, villagers were deprived of banking facilities and common men was afraid of even entering in to bank. Private Banks were exploiting not only staff working in the banks but were also exploiting business houses. Indira Gandhi is remembered in global financial crisis. In a reversal of its recently held position, the Congress party has declared that publicly owned banks are one of Indias strengths and that the nationalisation of banks was one of the partys important achievements. This has, as expected, upset those who have supported the partys two-decade long flirtation with financial liberalisation, which included an as yet unfinished drive to privatise public sector banks. The declaration was first made by United Progressive Alliance chairperson Sonia Gandhi at the Hindustan Times Leadership Summit. She argued that while the ongoing economic upheaval could grievously affect the most vulnerable sections of our society, her party had partially insulated Indias poor from becoming victims of the unchecked greed of bankers and businessmen. Elaborating, she said: Let me take you back to Indira Gandhis bank nationalisation of 40 years ago. Every passing day bears out the wisdom of that decision. Public sector financial institutions have given

our economy the stability and resilience we are now witnessing in the face of the economic slowdown. Coming from the Congress party chief a time of last elections election time, this could have been dismissed as mere rhetoric that is unlikely to influence policy. After all, the United Progressive Alliance chairperson had noted in the same speech that, the response to the economic slowdown resulting from the crisis should not be a return to the era of controls. But the cynics were surprised when just days after Sonia Gandhi made her remarks, then Finance Minister P.Chidambaram took the cue from his leader and extolled the virtues of a nationalised banking sector. Speaking at a function organised as part of the M. Ct. M. Chidambaram Chettyar centenary celebrations, he emphasised that Indias public sector banks were strong pillars in the worlds banking industry. So It will not be exaggeration to predict and say that the same Congress Party under the banner of UPA is dragging banking industry in pre- nationalization era. Please keep in mind that during reformation era 23 banks were forcefully merged to bigger banks by government of India because they succumbed to malady and irregularity they accumulated , ant not because they were small banks. In this regard we bring your attention the fourth, and most important, question posed in the discussion paper put out by the Reserve Bank of India in August 2010 examines the pros and cons of the 'Entry of New Banks in the Private Sector' is "whether large industrial and business houses could be allowed to promote banks". The Indian licensing guidelines of 2001 do not allow "large" industrial houses to sponsor new banks. The reasons go back to the dubious practices of such banks directing credit to preferred borrowers prior to bank nationalization in 1969. All the disadvantages of allowing industrial houses to sponsor banks are as valid today as before. Among major economies, Canada the United Kingdom, Germany] and France do not bar industrial companies from promoting banks. In contrast, the United States does not allow industrial houses to own banks. It is evident from the dispersed nature of past banking sector breakdowns that permitting industrial houses to own banks or disallowing them was not a good indicator of whether banks would need government back-stop funding assistance. The fourth, and most important, question posed in the paper is

"whether large industrial and business houses could be allowed to promote banks". The Indian licensing guidelines of 2001 do not allow "large" industrial houses to sponsor new banks. As the RBI paper has suggested, the probability of industrial houses interfering in banks promoted by them could be reduced by restricting banking licenses to companies with diversified ownership. The downside risk is that it may be practically impossible for RBI to prevent crony lending practices. Consequently, it is for RBI to assess whether, at our current stage of development, it can consistently monitor bank lending and stand up to pressures from corporate oligopolies. Consequently, we need to assess if periodic banking sector crises are inevitably linked to business cycles or whether they are more influenced by unconstrained and under-regulated growth of the banking sector as compared to the rest of the economy. For example, the banking sectors in the US, the UK, Iceland, Ireland, Cyprus and regional savings banks in Spain are significantly oversized and/or overleveraged. It is high time to reflect on the received wisdom that more is good in banking since this promotes growth. RBI should take its time to reassess outstanding levels of household, corporate and public internal and external debt, sectoral growth of credit and preferred size of the banking sector versus that of the economy before issuing licenses for the entry of new private banks. In a study, ASSOCHAM assumed that if all 27 public sector banks are merged, their capital base would be just $3 billion, which stands nowhere against the capital base of $20 billion of a single entity in China Industrial Commercial Bank of China. Going by the comparative figures that are available of US even as of 2005, if we add up today figure of Nationalized Banks India with US even merger of 19 nationalized banks is not going to create a new entity of international status. Even SBI is not even one-tenth the size of the tenth largest bank in the world. But this also means that no amount of consolidation will give Indian banks a global size in the foreseeable future. The argument Bigger size is needed for scale economies as being advanced by the Finance Ministry fall on four legs as scale economies are useful but beyond a certain size, the benefits of scale taper off and tend to be offset by

growing complexity. Internationally, studies have shown that a size of around $ 20 billion is optimal. Indias top ten banks meet this size requirement. One outcome of the present global crisis is that large banking monsters have come to be feared. The world's largest banking group viewed under many parameters including profitability is the Citigroup. An outstanding example of a financial services group that grew through M&As, the bank has been asked by the Federal Reserve Board to desist from further acquisitions until it refined its systems and procedures. If a bank such as the CITI, which has been a global force, could be faulted on its basics, there is clearly a message for Indian PSBs to be far more circumspect than what the Government would recommend. Some of the worlds biggest banks, the Citigroup notably, which relied heavily on mergers and acquisitions to grow phenomenally, have been rapped on the knuckles by the regulators and are realizing that such stupendous inorganic growth has come at a price. But In India, there is a revival of the clamour for bank consolidation disregarding these adverse trends Besides, universal banking itself seems to be going out of fashion. In India it is unlikely that banks will be able to impress all their customers across a variety of products. A deficiency in one area, not necessarily its main business, can affect its image disproportionately. Even more damaging is the fact that M&As can bring in disparate cultures that cannot be harmonised simply because of common ownership. . India needs expansion of banking and not consolidation of banks. The access to finance in developing countries has been considered as a necessity just like safe water or primary education. But in India 41 per cent of adult populations do not have access to banking services. So the questions we need to ask: is consolidation going to meet the developmental needs of unbanked regions in India, as there are 391 under-banked districts (out of a total 602 administrative districts) in India? Is it going to augment the reach of the banking system to millions of Indians citizens who do not have bank accounts? Given the fact that the average private banking customer can be ten times more profitable than the average mass-market retail customer, it is highly unlikely that the commercial interests of consolidation would match with the developmental needs of unbanked regions of both India. What is needed is branch expansion and not consolidation retaining the ethnic, federal structure and identity of existing nationalized banks

At a time when policy makers are still after mega-mergers among public sector banks, notwithstanding the failure of big banks globally, keeping bank mergers out of the purview of the Competition Act is unethical and procartelization. The Government, the RBI and a section of bankers are for the merger of associate banks with SBI and consolidation of 19 nationalized banks to 6 as mentioned above . Is this not creation of monopolies? By downsizing, cost is sought to be reduced. The real intent of consolidation is downsizing Public Sector Banks (PSBs) in terms of manpower and Branch-network to facilitate easy privatization. This is cartelization in Banking Industry and to develop synergies in functioning and ultimately to take step for merger. It is a prelude to merger. Now banks have also started to explore possibility of forming such alliance. Most of the bank employees are opposed these moves as this is also one form of cartelization precursor for consolidation i.e., forming an alliance to deal with a business. By their very nature, bank or financial service entities are people-centric. It is not clear whether those who advocate mergers as an easy option are aware of the strengths of such human capital. But in a country such as India, with 60 per cent of the populace financially excluded and only 5 per cent of villages with banking facility, bank mergers for pooling capital and big loan disbursements will not serve national interests. And this plan of bank mergers is part of a larger design that includes selling majority shares of PSBs to private entities, major foreign equity participation and outsourcing of basic banking services. The banking amendments approved by the parliament recently would compel all Indian banks to follow global power corridors, losing their sovereign entities. According to a report from Reuters on the December 06, 2012, the top ten banks worldwide have together cut as many as 1,50,000 jobs since July this year. Does the government wants our banks to follow the footprints of these world leaders in the liberalized environment The bill is dangerous for the existence of public sector banking system as also for the maintenance of indigenous& federal character of public sector banks. That is why the situation is serious. The above amendments should be opposed tooth and nail, otherwise the Public Sector Banks which have

played a very important role in the economic development of the country, will be poached by the corporate capital and Foreign Investors. The fallout of these amendments will be on the common people, who solely depend on the Public Sector Banks for their financial needs. TO BE CONCULDED AN APPEAL Dear friends After several days of studies and research, collating relevant information, , united in spontaneous emotions against ill-advised banking reforms, guided at the best by vague optimism, dissipating lack of perspective and constant lulls of despair, I ventured to write this series merger mania . I am glad to inform you that this series is coming to an end with this article merger mania VIII. Given the democratic polity that we have in India we need to educate our public mind on vital issues to enable them to make right choices at all levels. No democracy can afford an ignorant public mind. An ignorant public mind is more dangerous than an invading army. The true defence of democracy is informed public opinion. Our people should be educated on issues of consequences. As they hold the sovereignty and elect their representatives who shape their course of their destiny, awareness about vital issues of socioeconomic life of the nation is indispensable. Rightly said, attitudes are more important than facts. Lincoln was right when he said that nothing could succeed without public support and nothing could fail with it. Indian economys midnight hour is here. India is rediscovering herself under a new economic paradigm. This has brought us all under a massive socio-economic transition that is essentially painful. We, the nation, must understand and oppose it with all our forces in command this rather wrenching phase of transition of banking reforms to tame its ill effects. The issues are essentially confusing and common people simply do not understand them. Companies in hundreds are getting closed down, many companies are being privatized. This is causing loss of employment. We all hear the talk of Job less growth, Labour displacing growth, etc. The air is replete with terms like new Economy, Global Recession, Stagflation, demand pull recession, etc.

That is why people must understand the vital issues of ill advised banking and their possible consequences. This understanding must go beyond shortterm benefits. In fact, ours is a democracy of the illiterates. Very few seem to be discussing critical issues facing the nation. Most of the time our politics is misfocussed or trapped in non-issues. This is lethal for the future of the country. Sadly, our media too is not paying required attention to educate our public mind against the mendacious designs of these banking reforms which is affecting the common man- aam admi. There is definite need to go beyond reporting. Given the massive, pervasive illiteracy there is an urgent need to educate our public mind under an all-out effort on war footing. Nothing is more powerful than an informed public mind able to take quick decisions of consequences. The aped , failed theories, medicines prescribed by IMF and the west repeatedly aped as banking and installing class banking to suit a few privileged corporate cliques by the successive government giving a go bye to mass banking must be demystified, exposed and should made easy for the common man to understand it side effects and put to use. At last, everything boils down to economics. Even those who invest their hard earned money in public sector banks for safety and security also do not understand evil machinations of these antpeople banking reforms. . So there is imperative need to take up upon these issues to educate the public mind and explain vital concepts against peoples interests of the so called banking reforms beyond jargon to people. In this regard NUBE strived to make some humble, modest attempt in bringing to quip scorers of readers, public mind to understand many issues and demands beyond bank portals, unions charters & borders touching the chord of civil society, trade union/social activists, students, journalists and the public alike. That is why one again NUBE has taken up upon itself to educate the public mind and explain this time the issue of consolidation of banks to people. In the coming years NUBE will be coming out with focused books, special papers, etc. by organizing seminars and workshops to rally support of the wider sections of the society in opposition to consolidation of public sector banks in the it nests of the people. This merger mania series is for all. The objectives of this series is to enable people to understand important concepts in economics, banking, jargons of

consolidation , etc. and to get insightful understanding of changing economic environment and impact of Liberalisation, globalisation, privatization on our lives. In this venture of ours we are Grateful to all the personalities, for their contributions and to all friends of the people known and unknown who have been responsible for the success of this edition; who have not claimed intellectual property rights whose noble objective is to reach information to more and more people. Bank unions alone cannot fight these unwarranted economic & banking reforms. But People can, and must, for own sake , for economic activity is made in political terms people and people alone are the motive forces in halting , reversing needless banking reforms hurried in a breakneck speed by the successive governments . But sadly while sincere efforts were made mail this merger series to most of the unions in the Indian banking industry from the email contact address displayed in their respective website , none have cared to even acknowledge, leave offer their comments or upload in their site. But nevertheless we still continue nurture the conviction that none of us is above all of us. Viewed in this context and trends NUBE expresses its eternal gratitude to http://www.allbankingsolutions.com/ http://importantbankingnews.blogspot.in/ http://mitalismusings.blogspot.in/ for uploading this series and giving the coverage, recognizing the importance of the issue with no axe to grind. They have published these articles without excepting any favour except warmth of the love for the bank employees movement. They have placed us in their debt permanently. These sites having been doing splendid job in orchestrating the aspirations and hopes of average bank employees, calling spade a spade, with the symphony of their rhythms matching the expectations of the ordinary banker, in the process kindling vibrant, alternate space for them to voice their opinions without fear or favour . I have no qualms of compunction in admitting in any forum that these noble, pro- bank employee sites have emerged as the crusader to many average bankers as could be seen from the number their views/reads in their respective sites that they can be called as

average bankers news laundry. Whether we are exalted are decried for making this statement in public domain we dont bother. we answer to the call of our conscience . While writing this series , I am appalled to note that many project reports of graduation courses and business schools on consolidation are mostly cut paste predetermined documents advocating consolidations as the panacea for be all end all for evils plaguing the banking industry in India .Many of them will become prospective banker taking into account the massive retirements in another four year time in the banking industry in India . With their focus skewed in favour of consolidations in their project reports, will they support anti consolidation campaign of ours is the lurking fear we nurse? If these articles changes their mind set and ignites their imaginations to think alternates from the fixity of dogmas and views in our educational curriculum and they present in future articles, reports embracing truth and ground realities ,and the new recruits grasp the politics of mergers ,we can draw satisfaction that we have together made a new beginning in reengineering of mindsets of graduate and business schools students, which will go a long way in strengthening bank employees movement . We have made some humble attempt in bringing out this series to quip bankers, public mind to understand the consequences of consolidations of public sector banks. I trust this series will touch the chord of trade union activists, students, journalists, civil society activists,, and other wider sections of the society and the public alike and invoke their support, retaining the identity nationalized banks in the interest of people of our great nation. The genesis of these articles merger mania 1 to 8 lay in the long felt need for compilation containing an authentic and updated materials drawn from various resourceful materials on this crucial issue . . I do not claim any originality. There may be some gaps in between. But, nevertheless, I had tried to cover many dimensions and definitions in globalisation, banking and economic basic literacy jargons. Any part of this book may be freely reproduced in any form by any organization. But we would appreciate the copy of material is sent to our office with comments for furthering our knowledge. In preparing these documents I had infringed on the intellectual property rights of several individuals and also various resourceful documents, books in good faith with the hope that authors of these documents oppose patenting of intellectual property rights and they oppose IMF, WTO dictates. We term IPR as RIP (Restriction on Intellectual Progress).

We hold the conviction that right to information is directly linked with bringing truth to light. Information is power and documented information is democracy. We intent coming out with a book against consolidations of consolidating yours valuable suggestions and feedback. We shall be highly obliged if some of you can help us with cartoons depicting the kernel essence of each serial. It is with this objective we have requested the sites to upload these articles in public domain. Kindly help us with your feedback comments to the above mentioned sites or to presidentnube@gmail.com. Unity- Struggle - Unity is the lessons we have learnt. Unity and solidarity is the raison dtre for survival of unions in the banks in wake of the mendacious merger moves of the Government. Defend Public Sector Banks! Deflate Consolidation Myths! Defeat Consolidation among Public Sector Banks! Consolidate unity! Unity- Struggle Unity-Victory

Thank you
S.SRINIVASAN PRESIDENT NATIONAL UNION OF BANK EMPLOYEES