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C.R. Sukumar

Hyderabad , Aug. 17

ORIENTAL Bank of Commerce (OBC) has decided to appoint a global consultant in the next couple of weeks to suggest measures for an effective amalgamation with Global Trust Bank (GTB).

The Chairman and Managing Director of OBC, Mr B.D. Narang, said: "The international consultant will help us in evolving strategies for integration. These include rationalisation of branches and technology and evolving businesses to be pursued as a joint entity. The consultant will also advise us on restructuring our regional offices. The OBC board wants the entire amalgamation exercise should be done in a very scientific manner."

Mr Narang on Tuesday began charting out a detailed gameplan for an early, effective and smooth amalgamation of GTB with OBC and fast resumption of GTB operations.

OBC is bullish on turning around GTB in 12-18 months and also doubling the size of the combined balance sheet in the next two years. "Only then can the losses (owing to GTB acquisition) be covered. Otherwise, there is no meaning in this acquisition," he told Business Line.

Mr Narang held elaborate discussions with the GTB Managing Director, Mr Sudhakar Gande, and other top officials of the bank on the merger process.

Making it clear that the OBC staff would not be deployed at the GTB branches at all, Mr Narang said that the operations of GTB would be continued as a strategic business unit (SBU) and only one of the General Managers of OBC would be posted at Hyderabad to supervise the SBU's operations. "We will also create a department of post-merger management at Hyderabad."

Stating that the defaulters of GTB had deep pockets to delay the recovery process through various forums, Mr Narang said that OBC was confident of recovering at least 30 per cent of GTB's NPAs that stood at Rs 1,362 crore as on March 31, 2004.

OBC would go in for aggressive negotiated deals with the small defaulters for early recovery of sizable NPAs.

`Don't buy GTB shares'

THE Oriental Bank of Commerce (OBC) Chairman-cum-Managing Director, Mr B.D. Narang, has cautioned the investors not to risk their money by buying the shares of Global Trust Bank (GTB) in the current market since the amalgamation scheme does not provide for any swap ratio and the GTB shareholders would be paid money, if any, only after a period of 12 years as per the RBI scheme.

"See, I will be very honest. GTB has become history. This company doesn't exist anymore. So, the share certificate today is as good as a toilet paper," Mr Narang told Business Line.

Stating that OBC would be required to open two accounts as per the amalgamation scheme, one for assets and other for deficit, he said the recoveries would go into the deficit account and if any surplus left would go to the asset account. The surplus amount, if any, would continue under an escrow account for a period of 12 years and would be distributed among the GTB shareholders on a pro-rata basis.

"If anybody is telling you that the GTB share value will go up, it means somebody is trying to create rumours so that small man walks into and the big fry walks out. These rumours are being created by manipulators to entrap the small investors to come in so that they can get out. I advise the small investors not to get into this trap. The small investors should take a conscious decision only after going through the details of the scheme of amalgamation, especially pertaining to rewards to shareholders," Mr Narang said.

On why the Securities and Exchange Board of India was not stopping trading activities in the GTB scrip, Mr Narang said there was a procedure for banning the trading that involves issuing of notice with 15-days' time. Accordingly, a notice was issued, he said.

More Stories on : Private Banks | Mergers & Acquisitions | Public Sector Banks

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