The Hindu Business Line : Ramesh Gelli hopes shareholders too could gain

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."

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