Submitted by :

Gandra
Vamshikrishna(158913)
SOM,NITW
 What is Acquisition?
Acquisition may be defined as an act of
acquiring effective control over assets or
management of a company by another
company without any combination of
businesses or companies. i.e. a + b = a
 Global Trust Bank
GTB opened its first branch in Secunderabad
Andrapradesh on October 30,1994

Collected Rs. 100crores of deposits on the

first day of its operations

Promoters Ramesh Gelli, Jayanta Madhab,

Sridhar Subasri

August 14, 2004, GTB was amalgamated

with Oriental Bank of Commerce
 Rapid Rise of GTB
Initial Public Issue of RS 1040mn received subscriptions of
Rs 62.40bn from over 1 mn investors

Received Rs 1bn of deposits on day 1, Rs 10bn by the end

of first year and Rs 27bn at the end of 3 years

GTB won Best Export Performance Award from the Gem

and Jewelry industry

Established more than 500,000 client relationships

Present in all major cities, systematically spreading

coverage in smaller cities

Rated first amongst India Best Banks by Financial Express

 Business Model of GTB
Adopted a simple expedient of offering high deposit
rates to investors

Loans given mainly on the basis of personal guarantee

without any collateral security

GTB has spread its higher deposit rates over its

lending rates

GTB focused its lending to the small and medium

companies, which could be charged higher rate of
interest

Within SMEs, GTB focused on exporters of garments,

diamonds, IT, pharmaceuticals etc and give loans at
higher interest rates
 First Sign of Trouble
Credit decision process.
In 2000, bank fell short of capital
Lend to capital market (Ketan
Parekh)
2001-02, it suffered a nearly 60
per cent fall in net profits
Share price- 2001- 25.70
2004 - 3.60
 Share price of GTB

80

70

60

50

40

30

20

10

1995 96 97 98 99 2000 01 02 03

share price
Oriental Bank of Commerce (OBC)

Profile
Established in Feb 1943 in Lahore
After partition shifted to Amritsar
Nationalized on April 1980
Nationwide network of 1323 Branches
The merger allows OBC to expand its
operations in the south which is Global
Trust Banks operational territory." B.D.
Narang, , CMD, Oriental Bank of Commerce
 .
Global Trust Bank (GTB) was
promoted in 1990s by Ramesh
Geli.
As of March 2003, the bank had
an accumulated losses to the
tune of Rs 2.65 billion.
Hence, to protect the interest of
GTBs depositors, on July 26,
RBI announced the merger of
GTB with Oriental Bank of
Commerce (OBC).
The foundation of OBC bank
dates back to 1943.
The bank was nationalized on
15 April 1980. At that time OBC
ranked 19th among the 20
nationalized banks.
On 14 August 2004, OBC
amalgamatedGTB.
The Merger brought with it 103
branches, which increased
OBC's branch total to 1092.
and an additional 276 ATMs
and a workforce of 1400
employees.
 Benefits to OBC
Additional104 branches
Additional 275 ATMs
And a workforce of over 1400
employees
GTBs shareholders would not get
OBC shares
Tax benefits
The face value of GTB shares
from Rs 10 to Re 1
Willing to pay a 6:1 swap value
 Post Merger Benefits:

OBCs risk
Under this
weighted
scheme, all
assets are
GTB
expected
depositors
to increase
will become
by
OBC
approximat
deposit
ely 60
holders
billion.

Increase
On the
OBCs reach
technology
and
front, OBC
presence in
will gain
South
too.
India .
 Post Merger Challenges:

Profit of
OBC bound
to OBC have
decrease. to maintain
the
OBC can reputed
reduce the customer
impact by service of
utilizing its GTB
unrealized
profits
 Benefits to GTB
Equally beneficial for GTB depositors
Enjoy the trust of a public sector
bank.
Immense success of public sector
banks in India.
The interests of GTB's depositors
were safeguarded, its shareholders
(51 per cent of its equity is held by
small investors)
Motives Behind Consolidation

Growth
Synergy
Managerial efficiency
Strategic motives
Market entry
Tax shields and financial
safeguards
Regulatory intervention
 IMPACT ON GTB
Depositors
Shareholders
 Conclusion

Diseconomies of
Does not scale
require cash
&accomplished Clashes of
tax-free. culture
avoid many of
the costly and conflict of
time-consuming objectives
aspects of asset
purchases.
THANK YOU