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Poornima Mohandas

Mumbai , Dec. 3

EMPLOYEES of UTI Bank were caught unawares when TV channels flashed the deal of HSBC buying 20 per cent in the private bank.

"We had no inklingof such a thing. We had at best expected the exit of UTI at a later point in time," said a top-management level officer.

UTI Administrator, which holds 33.46 per cent in the bank, has a mandate to liquidate its investments. Several foreign banks were understood to have shown interest in UTI's stake.

Strangely, several stockbrokers — typically the first to smell large deals and developments — were seen to be not in the loop.

The CMD, Dr P.J. Nayak, himself was informed of the equity sale only on the evening of the signing of the agreement between CDC Capital Partners and HSBC when Mr Donald Peck, CDC's representative in India, and Mr Niall S.K. Booker, CEO, HSBC, met him separately at his office in Maker Towers, Cuffe Parade. UTI Bank, following the late night development, started the day with an internal meeting of the CMD with the 15 departmental heads. The situation was reviewed and the business continued as usual. There seems to have been no panic amongst the 2,900 employees but the grapevine was abuzz with informal discussions in every corridor of merger possibilities with the foreign bank.

For the time being, the development is widely perceived as merely one shareholder selling to another — the only difference being that the buyer is a bank whereas the seller is a private equity fund, said many an employee.

While most people in the bank knew nothing more than what had been broadcast on TV channels and printed in the newspapers, all are awaiting how regulatory changes from New Delhi will affect the nature of HSBC's so-called "financial investment" in the bank.

Even in the possibility of a distant merger, most of the staff are likely to be retained since they would be required to run the combined branch network of the two banks, said an official. Concern is likely only amongst the top-level management of UTI Bank, with fears of being displaced or of losing one's team.

Said a mid-level employee, "Since I'm not senior enough to affect policy-making in the bank, I may as well live with the changes. Do we have a choice?"

As of now, it is widely believed amongst the bank's top-level management that HSBC will conduct the open offer merely for regulatory compliance and is therefore not likely to hike the open offer price from Rs 90 per share at which it is to buy the stake.

The share price of the bank on Wednesday shot up by close to 20 per cent to close at Rs 114.10 on the BSE and therefore, there are likely to be no takers for the open offer at Rs 90, said a senior bank officer.

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