Financial Daily from THE HINDU group of publications
Tuesday, Jul 27, 2004

Cross Currency

Group Sites

Money & Banking - Private Banks
Markets - Stocks

Ramesh Gelli hopes shareholders too could gain

C.R. Sukumar

Hyderabad , July 26

THOUGH on the face of it, the RBI-prescribed merger of Global Trust Bank (GTB) with Oriental Bank of Commerce (OBC) appears to benefit both the depositors and the employees of GTB and not its 1.6-lakh odd shareholders for 12 years, the GTB founder promoter, Mr Ramesh Gelli, is optimistic that the shareholders will also get reasonably significant amounts.

The RBI scheme makes it clear that the merger will not be through a share swap deal. The entire amount of the paid-up capital and reserves of GTB will be treated as provision for bad and doubtful debts and depreciation in other assets. If any surplus remains after accommodating all appropriations, only then will shareholders get the amount on a pro-rata basis.

The GTB Managing Director, Mr Sudhakar Gande, said he was yet to go through the details of the amalgamation scheme pertaining to the rights and liabilities of GTB shareholders. However, while admitting that GTB shareholders would not get any OBC shares, Mr Gande said they could expect the residual amounts to be distributed among them.

While declining to comment on the RBI decision on swap ratio, Mr Gelli told Business Line, "I am confident that the shareholders will definitely get reasonably significant amounts in view of the franchise value of the bank as well as the huge tax benefits that accrue from write-offs. Anyhow, I am going to attend a meeting organised by a group of GTB shareholders, and will discuss the issue in detail."

Commending the apex bank for finding a quick and good solution for the bank in the form of a merger, Mr Gande said any delay in the merger announcement would have eroded the franchise value of GTB further.

"We are very happy that the interests of the depositors were fully protected with this merger move. We also appreciate the RBI for its decision to retain all GTB employees in OBC. Our employees deserve such reward for their dedication in ensuring that the bank recovered over Rs 1,000 crore in the last couple of years and added nearly two lakh quality customers."

Mr Gande said he was successful in completing the specific mandate given to him two years and three months back by the RBI - to manage and improve recoveries and help the bank in capital raising plans.

"Apart from Rs 700-crore recoveries, the bank also registered Rs 300-crore collaterals. The bank also could find a strategic investor, NewBridge Capital. Of course, it is a different matter that the regulator did not accept the concessions sought by NewBridge."

More Stories on : Private Banks | Stocks | Mergers & Acquisitions

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Write off farm loans up to Rs 10,000: Experts

Dilemma over hedging receipts — Forex swings fox IT cos
PSBs prop up rupee; gilts inching up
Federal Bank Q1 net up 20 pc
Allianz Bajaj revamps unit-linked policies
Small group term life plan from Allianz Bajaj
Treading the beaten path
Ramesh Gelli hopes shareholders too could gain
Goldman Sachs exited GTB in April-June quarter
Only a decade and all decayed?
From promoter to zero stakeholder
GTB deposits reasonably safe: Chidambaram
AP Govt funds not to be deposited in private banks
Trust intact
GTB advised to appoint auditor for DP operations
No impact of exposure not covered by collaterals in GTB
Nabard cuts interest rate
Proportion of bad loans to advances is the key
BoI launches Kisan Samadhan card
Hutch Citibank co-branded card launched
SBT revises FCNR rates
GTB to be merged with Oriental bank — No share swap arrangement; all employees to be retained
Panic is over for depositors, says OBC chief
Scheme of amalgamation — GTB accounts to be transferred to OBC
GTB merger: Oriental Bank to gain
Madhavpura revival crucial for co-ops

The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription
Group Sites: The Hindu | Business Line | Sportstar | Frontline | The Hindu eBooks | The Hindu Images | Home |

Copyright 2004, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line