Financial Daily from THE HINDU group of publications
Wednesday, Jul 28, 2004
Public Sector Banks
Money & Banking - Mergers & Acquisitions
Oriental Bank sees Rs 800-cr gap on merger
Mr. Rajiv Madhok, General Manager, Oriental Bank of Commerce, addressing a press conference in Hyderabad on Tuesday. - - A. Roy Chowdhury
Hyderabad , July 27
ORIENTAL Bank of Commerce (OBC), which is acquiring Global Trust Bank (GTB) as per the RBI scheme, is confident of recovering a good amount of the latter's non-performing assets of (NPAs) at the earliest.
Talking to newspersons immediately after meeting the top brass of the Hyderabad-based GTB on Tuesday, the OBC General Manager, Mr Rajiv Madhok, said his bank had already done its own exercise on the GTB financials and only after the gaining required confidence to recover the NPAs did it submit a detailed proposal to RBI a month back seeking to acquire and turn around GTB.
According to Mr Madhok, OBC would shortly indicate to the RBI the name of a third party auditing firm to begin due diligence exercise at the earliest. He said the bank expects to complete the due diligence process of GTB in the next five to six weeks. OBC expects to complete the merger process in another five to six weeks thereafter.
Stating that OBC expected a smooth transition, Mr Madhok said the moratorium on GTB could be lifted at the earliest. Admitting that OBC already had a good number of branches where the GTB's branches were located in the South, he said an exercise for restructuring and rationalisation might be required to address such minor issues.
At present, OBC has a network of over 1,000 branches spread across the country with a total business of Rs 56,000 crore as at the end of March 2004.
t is the first and only bank in the Indian banking industry to attain zero net NPAs.
Responding to a question as to what type of hit the OBC balance sheet would take on account of amalgamating GTB with itself, he said a gap of Rs 800 crore was expected in the balance sheet of OBC.
"We are confident of bridging this gap with the help of aggressive recoveries and tax benefits through merger. That is the reason why we volunteered to amalgamate and turn around GTB," Mr Madhok said.
Making it clear that the interests of both GTB depositors and employees would be fully protected, he, however, declined to comment elaborately on the fate of GTB shareholders.
"Their interests would be taken care of as per the scheme of amalgamation".
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