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By

Group 4

Mergers, Acquisitions andStartups in Banking Sector in

India

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Partial utilization of brand equity .

Increasing competition in same business. Strengthening itself for global competition.

Risk mitigation for financial stability.

SB Indore With SBI

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More service could be offered to customer .

Now SBI could better focus on internationalcompetitiveness.

Better opportunities to employees.

Profit to the investors of State Bank of Indore with a

swap ratio of 34:100.

Positive Impact Of Merger

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Profit declined.

Net loss of Rs. 0.10 billion in the nine monthsended on December 31, 2009.

Growing Network.

Expansion of ICICI Bank

Bank Of Rajasthan WithICICI Bank

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BoR shares on opening itself hit the 20 per cent uppercircuit at Rs 119.4, on a day when the Sensex

declined by 467 points.

ICICI Bank's branch network would go up to 2,463.

With this takeover ICICI Bank will cross Rs 4 lac

crore.

Positive Impact Of Merger

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ICICI Bank

Risks arising from BoR's non-performing loans and thatBoR is trading at expensive valuations

Shares declined by 7.24 per cent to close at Rs 825 on theBSE

Bank of Rajasthan

Salary of employees of BoR will be affected. Unions are not satisfied.

Customer switch over.

Negative Impact OfMerger

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Past Records

Centurion Bank merged with Bank OfPunjabin 2005. The combined entity merged with

Lord Krishna Bank in 2007.

HDFC Bank had also merged with Times

Bank tillthen.

Centurion Bank ofP

unjabWith HDFC Bank

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The combined entity can

capture and ride the growthin the financialservices

industry more optimally.

CBoP had high operatingcostsand NPAs.

Reasons

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For HDFC Bank

It would add scale to its operations, Facilitate its expansion to every nook and

corner ofthe country,and

Bring on board an experienced managementteam

Reasons (contd..)

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The

Number Game

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Whats Hot and Whats Not

Pros HDFC Bank getsthe top

class management of

Centurion Bank ofPunjab. Strong two-wheeler,

commercial vehicle and

construction equipment

portfolio.About 40 per cent

of CBoP's total retailassetscomprise home loans, car

loansand personalloans.

Gains geographicalspread,

especially in Punjaband

Kerala

Cons Share oflow-cost deposits

to decline marginally as

CBoP hasa muchlowerportfolio ofsuch deposits

than HDFC Bank.

CBoP has relatively high net

NPAs of 1.31 per cent. This

willaffect HDFC Bank'sasset quality.

Employee integration to be

abig issue as CBoP hasa

large workforce.

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Whats Hot and Whats Not

(contd..)Pros

Smalland medium

enterprises (SME) client

base of 2,500 andadvances of over Rs 1,500

crore.

Gets 394 branchesand

licenses for 350 more when

RBI isbeing very stingy ondoling outbranchlicenses.

CBoP providesthe perfect

fit in terms of culture,

strategy and approachto

business

Cons

Technology integration to

take time and also costa

packetasthe two banksoperate on different

platforms.

It'san all-stock deal,but

HDFC Bank promoterHDFC willhave to pump

in close to Rs 4,000 crore

to maintain itsstake ata

little over 23 per cent.

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AwaitingBankers

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Others Indiabullss promotertrio Sameer Gehlaut, Rajiv

Rattan and Saurabh Mittal. Kishore Biyanis Future Group. Biyani recently

lured V. Vaidyanathan from ICICI Prudentialto

join him.

The Kerala-based financing giant - The MuthootGroup led by George Muthoot

Sahara IndiaPariwar led by Subrata Roy

Ratnakar Bank Led By VishwavirAhuja

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They

Need to Look Out For

6Cs

Cost Control CASA

CapitalAdequacy

Credit Quality Culture

Customer Focus

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New Bankers

Pros Only big companies can bring

in the huge capital required

Suchbanks willbe able to playa more meaningful role in

financial inclusion,asthey are

able to invest capital in

technology and forge

partnerships

Ahigher capitalthreshold may

be needed to ensure thatthe

bank operates on astrong

capitalbase

Cons Big businesshouses may not

necessarily be well governed

Links with corporate housesmay prevent fair credit

decisions

Businesshouses may notbe

keen on broader objectives of

financial inclusion

A prolonged businessslump

may threaten the stability of

the banks

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THANK YOU!