Bank Of Rajasthan ICICI Bank

MERGER
ICICI Bank Profile
Works as a banking and financial service Organization
in India.
It is the 4th largest bank in India and the largest
private sector bank in India by market capitalization.
The bank also has a network of 1,700+ branches (as
on 31 March 2010) and about 4,721 ATMs in India and
presence in 18 countries.
Head quarter situated in Mumbai,Maharastra,India.
Mainly deals with products likes Investment Banking,
Commercial Banking, Retail Banking, Private Banking,
Assets Management, Mortgages, Credit Card.
MD & CEO of ICICI Bank is Chandra Kochhar
Bank Of Rajasthan Profile
It was set up at Udaipur in 1943 with an initial
capital of Rs.10.00 lacs.
It is a Old Private Sector Bank.
Mainly controlled by Tayal Business Group,the
have more than 50% stake in BoR.
It has 463 branches.
Head quarter situated in Clock Tower, Udaipur,
Rajasthan, India.
Mainly deals with products like Loans, Savings,
Investment vehicles, etc.
MD & CEO of BoR is G. Padmanabhan .
HISTORY OF MERGER BY ICICI Bank

2001: ICICI Bank acquired Bank of Madura.

2005: ICICI acquired Investitsionno-Kreditny

Bank (IKB), a Russia bank with about US$4mn in
assets, head office in Balabanovo in the Kagula
region, and with a branch in Moscow.

2007: ICICI amalgamated Sangli Bank, which

was headquartered in Sangli, in Maharastra
State, and which had 158 branches in
Maharashtra and another 31 in Karnataka State.
 Reason for Merger of BoR
Incurred net loss of 92.3 crore in 4th quarter of FY2010
SEBI bans 100 entities related to Bank of Rajasthan
Banned several member from Tayal Business Group.
SEBI banned promoters (Tayal Family) of bank from all stock
market activities .
SEBI acted on reference from RBI .
SEBI conducted an investigation into shareholding pattern in BoR
since 2007
Investigation revealed entities acting in connivance with Tayals to
corner shares Bank shown promoter holding dipped from 44.2%
to 28.6%
SEBI investigation Tayal actually controlled 55% in the bank
How its going to be happen?
ICICI Bank announced merger with Bank of Rajasthan
with it through share-swap in a non-cash deal that
values the Bank of Rajasthan at about Rs 3,000 crore.

Each 118 shares of Bank of Rajasthan will be

converted into 25 shares of ICICI. This is based on an
internal analysis of the strategic value of the proposed
amalgamation, average market capitalization per
branch of old private sector banks and relevant
precedent transactions

Paid Rs 6.5 crore per branch and that is the average

market cap for old private sector banks.
COMPARISION OF BoR & ICICI
Bank
Basis BoR ICICI BANK
CASA Deposits Rs 4163crores Rs 21000crores
Business per Rs 47crores Rs 304crores
month
Return on 0.7% 1%
average assets
Net non- 1.05% 2.1%
performing
assets
Benefit of Merger for ICICI
Bank
The proposed amalgamation would substantially
enhance ICICI Banks branch network, already the largest
among Indian private sector banks, and especially
strengthen its presence in northern and western India.

The rationale for the merger, according to the ICICI Bank

management, is that it would have taken the bank three
years to build the kind of low-cost current account and
savings account (CASA) relationship, it gets to build upon
now with the latest move. ICICI Bank has had its sights
set firmly on expanding its share of CASA deposits.

Adds 25% to their branch network.

Resistance from Employee
Over 4200 employees of Bank of Rajasthan showed
protest against the merger.
Issues:
i)if a merger is essential it should be with a public sector
bank.
ii) The main issue of Indian Banks Association with
bank staff unions is negotiation of their wages.
iii) BoR employees' wages are governed by the
industry wage packages unlike other private sector
banks in the industry.
iv)Retrenchment of existing employee
v) No cultural fit whatsoever between the working of
our bank and ICICI Bank
 ICICI BA NK APPR OACH TO WARDS RESISTAN CE.

After the protest by employees of BoR,

ICICI Bank management clear that their
will be no retrenchment of employee.

Salaries and service condition will be

dicided according to bipartite
settlement Indian Banks' Association
and the United Forum of Bank Unions.
Conclusion
Merger of BoR an old private sector bank
with India's 2nd largest private sector bank
will definitely help both of this parties as
ICICI Bank can extend it activities as it total
number branches will go up by 25% and
BoR will also get new direction as it already
witness the share price of BoR in BSE is
almost doubled after the announcement of
the merger.
THANK YOU