Bank Of Rajasthan – ICICI Bank

MERGER
ICICI Bank Profile
 Works as a banking and financial service Organization in India.
 It is the 4th largest bank in India and the largest private sector
bank in India by market capitalization.
 The bank also has a network of 1,700+ branches (as on 31
March 2010) and about 4,721 ATMs in India and presence in 18
countries.
 Head quarter situated in Mumbai,Maharastra,India.
 Mainly deals with products likes Investment Banking,
Commercial Banking, Retail Banking, Private Banking, Assets
Management, Mortgages, Credit Card.
 MD & CEO of ICICI Bank is Chandra Kochhar
Bank Of Rajasthan Profile
It was set up at Udaipur in 1943 with an initial capital of
Rs.10.00 lacs.
It is a Old Private Sector Bank.
Mainly controlled by Tayal Business Group,the have more
than 50% stake in BoR.
It has 463 branches.
Head quarter situated in Clock Tower, Udaipur, Rajasthan,
India.
Mainly deals with products like Loans, Savings,
Investment vehicles, etc.
MD & CEO of BoR is G. Padmanabhan .
HISTORY OF MERGER BY ICICI Bank

2001: ICICI Bank acquired Bank of Madura.

2005: ICICI acquired Investitsionno-Kreditny Bank

(IKB), a Russia bank with about US$4mn in assets, head
office in Balabanovo in the Kagula region, and with a
branch in Moscow.

2007: ICICI amalgamated Sangli Bank, which was

headquartered in Sangli, in Maharastra State, and which
had 158 branches in Maharashtra and another 31 in
Karnataka State.
 Reason for Merger of BoR
Incurred net loss of 92.3 crore in 4th quarter of FY2010
SEBI bans 100 entities related to Bank of Rajasthan
Banned several member from Tayal Business Group.
SEBI banned promoters (Tayal Family) of bank from all stock market
activities .
SEBI acted on reference from RBI .
SEBI conducted an investigation into shareholding pattern in BoR since 2007
Investigation revealed entities acting in connivance with Tayals to corner
shares Bank shown promoter holding dipped from 44.2% to 28.6%
SEBI investigation Tayal actually controlled 55% in the bank
How its going to be happen?
ICICI Bank announced merger with Bank of Rajasthan with it
through share-swap in a non-cash deal that values the Bank of
Rajasthan at about Rs 3,000 crore.

Each 118 shares of Bank of Rajasthan will be converted into

25 shares of ICICI. This is based on an internal analysis of the
strategic value of the proposed amalgamation, average market
capitalization per branch of old private sector banks and
relevant precedent transactions

Paid Rs 6.5 crore per branch and that is the average market
cap for old private sector banks.
COMPARISION OF BoR & ICICI
Bank
Basis BoR ICICI BANK

CASA Deposits Rs 4163crores Rs 21000crores

Business per month Rs 47crores Rs 304crores

Return on average 0.7% 1%

assets
Net non- 1.05% 2.1%
performing assets
Benefit of Merger for ICICI Bank
The proposed amalgamation would substantially enhance ICICI
Bank’s branch network, already the largest among Indian private
sector banks, and especially strengthen its presence in northern and
western India.

The rationale for the merger, according to the ICICI Bank

management, is that it would have taken the bank three years to
build the kind of low-cost current account and savings account
(CASA) relationship, it gets to build upon now with the latest
move. ICICI Bank has had its sights set firmly on expanding its
share of CASA deposits.

Adds 25% to their branch network.

Resistance from Employee
 Over 4200 employees of Bank of Rajasthan showed protest
against the merger.
 Issues:

i)if a merger is essential it should be with a public sector bank.

ii) The main issue of Indian Banks Association with bank staff
unions is negotiation of their wages.
iii) BoR employees' wages are governed by the industry wage
packages unlike other private sector banks in the industry.
iv)Retrenchment of existing employee
v) No cultural fit whatsoever between the working of our
bank and ICICI Bank
IC ICI BANK APPROA CH TOWARDS RESISTANCE.

After the protest by employees of BoR, ICICI

Bank management clear that their will be no
retrenchment of employee.

Salaries and service condition will be dicided

according to bipartite settlement Indian Banks'
Association and the United Forum of Bank
Unions.
Conclusion
Merger of BoR an old private sector bank with India's
2nd largest private sector bank will definitely help both
of this parties as ICICI Bank can extend it activities as
it total number branches will go up by 25% and BoR
will also get new direction as it already witness the
share price of BoR in BSE is almost doubled after the
announcement of the merger.
THANK YOU