acuisition of gtb by obc

7/28/2019 acuisition of GTB by OBC

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Submitted by :Shashank Bijagare (07)Rajesh More (34)


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What is Merger?

A merger is when you integrate the business withanother and share control of the combined

businesses with other owner. Amerger involves themutual decision of two

companies to

combine andbecome one entity. i.e. a + b = c

Merger: 2 firms combine all Assets and LiabilitiesAcquirer Target

Usually take a new name


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What is Acquisition?

Acquisition may be defined as an act ofacquiring effective control over assets ormanagement of a company by another

company without any combination ofbusinesses or companies. i.e. a + b = a


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Global Trust Bank

GTB opened its first branch in SecunderabadAndra-pradesh on October 30,1994

Collected Rs. 100crores of deposits on the first

day of its operations

Promoters Ramesh Gelli, Jayanta Madhab,Sridhar Subasri

August 14, 2004, GTB was amalgamated withOriental Bank of Commerce


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Rapid Rise of GTB

Initial Public Issue of RS 1040mn received subscriptions of Rs62.40bn from over 1 mn investors

Received Rs 1bn of deposits on day 1, Rs 10bn by the end of firstyear and Rs 27bn at the end of 3 years

GTB won Best Export Performance Award from the Gem andJewelry industry

Established more than 500,000 client relationships

Present in all major cities, systematically spreading coverage insmaller cities

Rated first amongst India Best Banks by Financial Express


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Business Model of GTB

Adopted a simple expedient of offering high deposit rates toinvestors

Loans given mainly on the basis of personal guaranteewithout any collateral security

GTB has spread its higher deposit rates over its lending rates

GTB focused its lending to the small and medium companies,which could be charged higher rate of interest

Within SMEs, GTB focused on exporters of garments,diamonds, IT, pharmaceuticals etc and give loans at higherinterest rates


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First Sign of Trouble

Credit decision process. In 2000, bank fell short of capital

Lend to capital market (Ketan Parekh)

2001-02, it suffered a nearly 60 percent fall in net profits

Share price- 2001- 25.70

2004 - 3.60


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0

10

20

30

40

50

60

70

80

Share price of GTB

share price

1995 96 97 98 99 2000 01 02 03


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Oriental Bank of Commerce (OBC)

Profile

Established in Feb 1943 in Lahore

After partition shifted to Amritsar Nationalized on April 1980

Nationwide network of 1323 Branches

The merger allows OBC to expand its operations

in the south which is Global Trust Banksoperational territory." B.D. Narang, , CMD,

Oriental Bank of Commerce


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Oriental Bank of Commerce

Chairman : T.Y.Prabhu

Ex Director : Ratnakar Hegde

S.C Sinha

Head-office: New Delhi

Directors : V Vijay Sai Reddy

U K Khaitan

R S Maharishi

Sumita Dawra


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Achievement

OBC crosses business of Rs 2 lac crore

NP Rs 1000 crs reaches 1134.68 crs growth25.32 %

Operating profit Rs 2412.50 crore

Branch Network1500

ATM Network 1000 Client Base 13.5 million

Dividend for the year @ 91%


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Credit Schemes

Social Banking

Corporate Banking

Business Sector

Flexi Fixed Deposit Scheme


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Ranked among top 50 companies by the leading

financial daily, Economic Times.

Ranked as 323rd biggest bank in the world by

Bankers Almanac (January 2006), London. Earned 9th place among India's Most Trusted top

50 service brands in Economic Times- A.C Nielson

Survey.

Included in the top 1000 banks in the world

according to The Banker, London.


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GTB & OBC results for 2003-04

Particulars GTB OBC Combined

Advances 32.76 156.77 189.53

Investments 26.5 147.8 174.3

Deposits 69.21 298.09 367.3

Net profit -2.73 4.57 ----

Gross NPA 9.16 11.46 20.62

Net NPA 6.48 2.25 8.73

Gross NPA

(per cent)

25.8 6.9 10.8

Net NPA (per

cent)

19.8 1.4 4.6

Branches

(nos)

87 989 1076

Staff (nos) 1,314 13,507 -----

Capital

adequacy

ratio

0.0 14.0 12.2


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Benefits to OBC

Additional104 branches

Additional 275 ATMs

And a workforce of over 1400 employees

GTBs shareholders would not get OBC

shares

Tax benefits

The face value of GTB shares from Rs 10

to Re 1

Willing to pay a 6:1 swap value


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Benefits to GTB

Equally beneficial for GTB depositors

Enjoy the trust of a public sector bank.

Immense success of public sector banks inIndia.

The interests of GTB's depositors were

safeguarded, its shareholders (51 per centof its equity is held by small investors)


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THANK YOU

acuisition of gtb by obc

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