Banking Merger
On the driving factors for the merger
AK: The driving force for this merger is to set up a robust bank with a high capital base. In brief, the underlying driving factors are to cope with pressures in the form of increasing capital adequacy requirements, tightening prudential norms, and the increasing demands on resources to be committed for technology and infrastructure. For UTI Bank, there was the additional regulatory pressure to bring down its promoters' stake to below 40 percent in keeping with licensing conditions.
On the merged bank
AK: The new entity will effectively combine the strengths and complementary features of the two banks. It will be strongly capitalised with a networth that will be in excess of Rs 1,000 crore by end-March 2001.
On synergies
AK: The two banks have lot of similarities. They are roughly of the same size, age and have retail presence. Both have a strong technology base with similar technology platforms. Both banks also have the advantages of new private sector banks:- lean staff, automated and non-unionised work environment and connectivity.
Although there could be an overlap of branches because of the merger, there are also some complimentary strengths. Global Trust Bank, has a fairly strong clearing bank business and UTI Bank, is strong in cash management products. UTI Bank, with support of UTI has strong Corporate Base, while GTB is one of the strong retail Bank.
On product portfolio
AK: Consumers will be the beneficiaries from this merger. The merged entity is expected to have a focus on retail. With good technology and backing of UTI, retail customers will benefit in terms of more ATMs, deposits, and loan products.
On UTI Bank's public sector image and integration
AK: Both UTI Bank and GTB basically are manned by bankers from PSU and old Private sector Banks and their work culture...
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