The GTB - UTI Bank Merger
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Case Details:
Case Code : FINC004
Case Length : 7 Pages
Period : 2001
Pub. Date : 2002
Teaching Note : Available
Organization : GTB
Industry : Banking
Countries : India
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FINC004) click on the button below, and select the case from the list of available cases:
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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
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"I do not maintain one-to-one contact with Mr. Parekh-I do not even remember meeting him other than may be at a social gathering. The bank has no means of knowing who buys or sells shares as the equity of the bank is in demat form. Through investigations we understand that the holdings of the companies which the media states belong to Mr. Parekh is less than 2% today. There is no special advantage offered by GTB to Mr. Parekh or his companies."
- Ramesh Gelli, chairman and managing director, Global Trust Bank, commenting on his alleged nexus with stock broker Ketan Parekh in an interview to Businessworld, April 23, 2001.
Introduction
On January 24, 2001, employees of the Hyderabad based Global Trust Bank (GTB) received an email from Ramesh Gelli (Gelli), Chairman and Managing Director (CMD), GTB.
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It read, "I am taking the opportunity of sharing some important and exciting news with you. We have now considered growing large through a process of merger. I am happy to inform you that we have now worked out a scheme of amalgamation with UTI Bank and Global Trust Bank. The merged bank will be called UTI-Global Bank with a registered office at Secunderabad. With this contemplated merger, UTI-Global would become the largest bank in private sector and would derive lot of synergy and complement each other strengths.... UTI Global Bank is expected to effectively combine the strengths and complementary features of the two banks.
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It will be strongly capitalized with a net worth likely to exceed Rs. 10 billion by the end of March 2001....
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I am very confident that ...we all can look to the future with greater amount of confidence and grow to be a dominant player in the financial sector." The boards of UTI Bank and GTB were to meet on January 27, 2001, to consider the scheme of amalgamation.
SBI Capital Markets Limited (SBI Caps) would facilitate the merger, do the valuation, and also act as advisor to both the banks.
On January 27, 2001, the board of directors of GTB approved the amalgamation of GTB with UTI Bank. Soon after, the boards of UTI Bank and GTB approved the share-swap ratio... |
The GTB - UTI Bank Merger
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