Saturday, 22 November 2014

Kotak Mahindra Bank acquire ING Vysya Bank: Mega Merger

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  •     Kotak Mahindra Bank acquire ING Vysya Bank in an all stock deal: Mega merger 

  •     Kotak Mahindra Bank was founded by broker-turned-billionaire banker Uday Kotak.  Kotak Mahindra Bank is now in a better position to compete with bigger non-state rivals such as ICICI Bank and HDFC Bank. All ING Vysya branches and employees will become Kotak Mahindra Bank and employees" after the deal is completed, the banks said. The transaction is subject to the approval of shareholders, the Reserve Bank of India, the Competition Commission of India and other agencies. This move will strengths in corporate and retail banking. Industrialist Anand Mahindra and Deepak Parekh, chairman of HDFC is also happy with move. In fact government should also start consolidating public sector banks. The share exchange ratio is considered fair and reasonable given the underlying value of ING Vysya, as also giving shareholders the ability to benefit from the potential that can be realized upon merging into Kotak Mahindra Bank. This will increase Kotak Mahindra Bank's branches to 1,214 from 641 now. Kotak Mahindra Bank has a 68 per cent presence in the west and north while ING Vysya is strong in the south, especially Andhra Pradesh, Telangana and Karnataka. Kotak Mahindra Bank will gain 2 million customers from this merger. The merger would be done through a share swap in which 725 equity shares of Rs 5 each of Kotak Mahindra will be issued for every 1,000 shares of Rs 10 each held in ING Vysya Bank. Banking deal will create India's fourth largest private lender as Kotak Mahindra Bank. On November 21, 2014, Kotak Mahindra Bank closed at Rs 1199.65, up Rs 42.60, or 3.68 percent. The 52-week high of the share was Rs 1163.70 and the 52-week low was Rs 630.80. Kotak Mahindra Bank chief Uday Kotak has assured that there will not be "any dramatic" reduction immediately in the number of employees following the merger of ING Vysya Bank. While ING has around 10,000 employees, Kotak Bank has around 29,000. "We believe total number of employees will grow over time, but we don't see any dramatic reduction in the net number of people in a hurry," the Executive Vice-Chairman and Managing Director of Kotak Bank Uday Kotak. This is a merger for growth, not for cutting. ING Vysya Bank Deputy Chief Executive Uday Sareen said cost cutting was not the objective of the merger. But this is not one merger which talks about cost cutting and that is an extremely important point which we would like to communicate. Kotak said the merged KMB will not look at having a presence internationally.

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