Presented By RAJESH SAHA

Tayals claims to hold 28.6%, but according to Sebi, hold nearly 55 per cent stake in the bank.. In March, Sebi banned 100 entities allegedly holding BoR shares on behalf of the promoters from all stock market activities. Sebi accused Tayals of misleading investors about the shareholding pattern of the bank. In February 2009, RBI also slapped a fine of Rs 25 lakh on the bank following reasons: violations related to know-your customer (KYC) guidelines, acquisition of immovable property, deletion of records in the banks IT system, irregularities in the conduct of accounts for certain companies and for failure to present documents to the regulator. lapses in corporate governance and disclosure norms. Subsequently, the Tayals, who have been under pressure to lower their stake in the bank to RBI-prescribed level of 10 per cent, were forced to start looking at options to exit BoR.

 Sebi,

on the other hand, has put a question mark on the shareholding of BoR. Though BoR promoters say they hold a 28.60% stake in the bank, Sebi has put the promoter shareholding at 55.01%. In March, Sebi had banned 100 entities allegedly holding BoR shares on behalf of the promoters from all stock market activities. Under the circumstances, Tayals may have to sort out the issues with Sebi to execute the deal with ICICI. Hence, this is really a voluntary merger that both parties have initiated and not done under any pressure.

 ICICI

Bank has about 2,000 branches while BoR has 463 spread across the country, is less than one-fourth of ICICI Banks network. BoR has a market capitalisation of Rs 1,600 crore compared with ICICI Banks Rs 99,000 crore.(Figure as on 2009) BoR reported a net loss of Rs 44.7 crore for the quarter ended December 2009 on a revenue of Rs 344.83 crore. In terms of assets, ICICI Bank is around 25 times as large as BoR. Based on December numbers, bad debts appeared to be under control for BoR.

1997: Takeover of ITC Classic Finance 1998: Takeover of Anagram Finance 2000: Merger with Bank of Madura 2002: ICICI and ICICI Bank merge 2005: Acquires Russias IvestitsionnoKreditny Bank 2007: Amalgamation of Sangli Bank

 Takeover

of old private banks help ICICI Bank in expanding its footprint further, which is in line with its new-found branch-focused strategy Since 1997, when it acquired ITC Classic, ICICI Bank has periodically merged banks with itself to increase its reach. It offers a strategic fit, as it adds to their network in north and western India. It saves about three years time to market. In the normal course, it takes about a year to set up 500 branches and then three years for the branches to come up to the kind of deposit levels.

The integration of BoR would help ICICI Bank to increase its branch network by 25% to about 2,500 across the country. It will also give greater visibility to the bank in the western and northern parts of the country With the merger, the turnover of ICICI Bank would cross Rs4,00,000 crore. BoR has a total business of over Rs23,000 crore, against nearly Rs3,84,000 crore of ICICI Bank. First, in case of old private sector banks, market capitalisation per branch on an average is Rs 6.5 crore and thats what we have paid. Second, its not a question of any bank. It is where you want to add to your network.

 The

branch is the building block but it gives us synergies in the form of a larger customer base. It gives us the ability to offer other products to this customer base such as different loan products from ICICI Bank and other products. We have a high capital adequacy ratio, so the customer base that we are acquiring will help us in lending.

 What

about BoR employees given that they are covered by the industry-wide wage pact? We have gone through two mergers earlier and we have sufficient experience and we think that we behave like a responsible and fair organisation. If you see the last two mergers, we have been very fair to the employees and we have kind of kept up with the commitments. We will behave in the same manner. I want to assuage any worries that anybody would have. There is no need to have any worry on this count.

 Does

the acquisition mean that ICICI Bank is fully back on the growth path and branchled strategy is here to stay? Yes, clearly. Its not just the acquisition, we have been saying for the last one year that we are focusing on a branch-led strategy, we are focusing on being customer-centric and focusing on increasing the current and savings account. So, this clearly fits into our strategy.