PUBLIC sector lenders and employee unions have finalised at the 10th bipartite settlement for a 15- percent hike compared to a 17.5 percent increase agreed upon in the last negotiation in 2010, says amedia report.
A 15-percent salary hike is on expected lines with most banks providing for a 12-17 percent increase. The largest public sector...lender SBI, Punjab National Bank and Bank of Baroda have provided for the 15 percent increase while Union Bank and the Bank of India have provided for 12-13 percent hike.
This is likely to lead to a small hit of 3-4 percent of their FY15 PBT (profit before tax). This is based on their current run-rate of provisioning.
The good part is that this time, PSU banks are well provided unlike last time when employee expenses spiked 50 percent in FY11 after negotiations.
The only caveat is that the pension impact of wage hike is not easy to compute and could likely lead to some negative surprise.
The agreed wage hike will be payable from November 12.
The hike is on expected lines as most of the banks have been providing assuming a hike of 12-17 percent.Last time most banks were under provided and that led to a 50 percent increase in employee costs in FY11.