UTI Bank, GTB share swap set at 9:4
JD Power plans to expand operations

 
 
UTI BANK, GTB SHARE SWAP SET AT 9:4 
 
 
FROM OUR CORESPONDENT
 
Mumbai, Jan. 27: 
The boards of UTI Bank and Global Trust Bank (GTB) today approved the merger of these two private sector banks and recommended a swap ratio of nine shares of the former to four shares of the latter to establish UTI Global Bank Ltd, the new entity.

“The amalgamation would be achieved by merging UTI Bank into GTB, notwithstanding UTI being the principal shareholder of the merged bank,” Unit Trust of India chairman P.S. Subramanyam told newspersons here.

The new board comprising 12 members would have eight and four representatives from UTI and GTB respectively, he said. While P.J. Nayak will be the chairman, Sridhar Subasri will hold the post of executive director.

Subramanyam ruled out any retrenchment of staff from both banks and said “there may be rationalisation of some branches to avoid duplicity. Such cases may not be more than 10.

An extra-ordinary general meeting of the respective banks would be convened on February 24, he said.

The merging of UTI Bank into GTB, senior officials said, had been done in order to make it attractive to the shareholders by increasing the earnings per share.

While UTI Global Bank will have a combined balance sheet size of nearly Rs 20,000 crore, the top four shareholders in the merged entity would be UTI with 19.8 per cent, GTB promoters (16 per cent), FIIs/NRIs/OCBs (12.8 per cent) and IFC with 7.8 per cent. The public will be holding around 36.8 per cent in the new entity.

According to Subramanyam, the bank would go for an international listing within a span of 12 months. The bank has targeted an asset size of Rs 50,000 crore by the third year of its merger.

Both the banks expect the merger to be completed by February 28 after receiving nods from the shareholders and the Reserve Bank of India (RBI).

“We expect that by March 31, the balancesheet will be that of UTI Global Bank,” P.J. Nayak, chairman and managing director of UTI Bank said. The entire integration process is expected to be completed by three to six months.

According to Nayak, a range of 2-2.50 was initially struck upon while determining the swap ratio. “We came to know that determining the swap was not a easy ratio to converge to. Later we took the arithmetical average and decided on a swap of 2.25,” he said.

Senior SBI Caps officials here pointed out that four criteria which included weighted EPS, the Sebi pricing norms, book value and maintainable profits were adopted while determining the swap ratio.

The merged bank is expected to effectively combine the strengths and complementary features of the two banks and emerge as a well-capitalised institution.

Nayak said, the complementarity of the merger was not only evident in terms of geographical area, but also in terms of various products. “We will be sourcing the best of resources from both the banks,” he said.

While UTI Bank was more of a corporate bank, the addition of a strong retail network from GTB would create a powerful point of sale network. Moreover, UTI Bank was also strong in cash management with UTI being its major client. While the bank was handling around 90 per cent of the cash management of the mutual fund major, this was also replicated in the case of other corporates. The entire process is expected to result in enlarging the customer base apart from offering a wide range of services to a large number of clientele.

Subramanyam said UTI Global Bank also proposes to foray into insurance sector which would be spearheaded by Gelli as the chairman and managing director.

The capital adequacy ratio of UTI Global Bank would be above 11 per cent for current year, Nayak said.

   

 
 
JD POWER PLANS TO EXPAND OPERATIONS 
 
 
FROM SATISH JOHN
 
Mumbai, Jan. 27: 
JD Power and Associates, the globally renowned independent analysts of consumer attitudes in the automobile industry, plans to expand the scope of its activities in India by diversifying into industries like telecommunications, airlines and hoteliering.

“We have plans to open an office in India,” Rajeev Lochan of J D Power Asia Pacific told The Telegraph. Currently, the J D Power team operates from Singapore.

Abroad, J D Power and Associates provide services for a wide range of industries in the advertising, automotive, automotive suppliers, cable and satellite, banking and telecom segments.

Lochan said the favourable response from Indian auto majors to its services and global expertise in select industries had prompted JD Power to consider setting up base in the country. “However, we are yet to take a decision on the location,” he added.

During the current year, it plans to introduce new products for the auto sector. JD Power currently provides four packages for Indian auto companies — premier customer satisfaction study; automotive performance, execution and layout study; initial quality study; and original tyre customer satisfaction index study. It plans to bring indices like sales satisfaction index, vehicle dependability index, dealer attitude study and service usage in the near future, Lochan said.

At the recent J.D. Power’s awards ceremony here, Lochan said Maruti and Honda Siel shared the top rank with an index score of 115, four points above the industry average.

The JD Power report stated that the other makes that performed well above the industry average were Hyundai and Hindustan Motors.

Hyundai Santro was awarded the trophy for the most appealing small car. The other recipients were Ford Ikon for being the most appealing entry midsize car, Mitsubishi Lancer (the most appealing premium midsize car) and Toyota Qualis, which won the award for the most appealing vehicle in the multi utility vehicle segment.

In the initial quality study, Hyundai Santro was the best car in initial quality and Maruti Esteem, Mitsubishi Lancer and Toyota Qualis were awarded the best MUV in their respective segments.

   
 

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