[sbinews] Merger, REverse Merger and Demerger

  • From: sbistcbangalore@xxxxxxxx
  • To: sbinews@xxxxxxxxxxxxx
  • Date: Wed, 24 Dec 2003 13:01:50 +0500

Current account

[ WEDNESDAY, DECEMBER 24, 2003 12:50:01 AM ] 
Loan wolf 

UCO Bank made news when its initial public offering was oversubscribed 17.5 
times a couple of months ago. The unexpected enthusiasm for a bank which was in 
dire straits just a few years ago was attributed to the general fervour in 
respect of bank stocks and also the fact that the bank had got over its bad 
loan problems. 

That may have been only part of the reason. The central bank is looking into 
complaints that the bank had provided loans to applicants, thereby inflating 
investor demand. Not that investors needed any encouragement. The stock 
continues to trade at nearly double the issue price more than a month after 

Loose change 

Along with the much-discussed problems of plenty in foreign exchange inflows, 
there is another area where RBI is facing an embarrassment of riches. Coins, 
which were minted and even imported by the RBI two years ago to meet the 
shortages then, are now coming back in tonnes. 

With inflation making 25 paise coins worthless, the central bank is now looking 
for technology solutions to handle the reverse flow of coins. According to 
deputy governor Vepa Kamesam, the central bank is planning to get banks to 
install coin sorting machines, where the general public can pour their coins 
into a hopper and get currency notes from an ATM-like vending machine. 

Road rules 

IDBI Bank surprised banking circles by raising deposit rates at a time when 
most banks are finding it difficult to service their existing deposit base. 
This sudden hunger for bank deposits has set tongues wagging in banking 
circles. Some are even drawing parallels with ICICI Bank’s aggressive deposit 
mobilisation drive in the run up to the reverse merger of ICICI Bank with 
ICICI. The speculation is that the deposits are being built up to meet expanded 
reserve requirements after a reverse merger. 
 Home a-loan 

Along with IDBI Bank, Union Bank of India too surprised bankers by announcing a 
hike in home loan rates, even as cut-throat competition prevails in that 
segment. More surprising was the reason for the hike: increasing bad loans. If 
high rates were indeed a deterrent to defaulters, then the current dead-weight 
of non-performing assets should never have existed since most of the loans were 
granted at rates of around 19-20%. Meanwhile, the person who blew the whistle 
on rising delinquencies on home loans, BD Narang, chairman, Oriental Bank of 
Commerce, is yet to revise home loan rates. 

Scale up 

Whether it is ATMs, home loans or auto loans there is one word that describes 
ICICI Bank’s strategy: scale. But on the issue of corporate banking there had 
been some debate on whether marketshare is more important than profitability. 
The bank’s head of corporate banking  Nachiket Mor had so far gone for 
profitability. But this approach, we understand, has changed with chief 
executive KV Kamath insisting that the bank should concentrate on marketshare. 

Family feuds 

Is Bank of Punjab bringing in a strategic partner or not? The bank has 
indicated that it was open to investors but does not appear to have made any 
progress on that front. One possible reason for this we hear is that there are 
differences in the promoter family on the issue. Incorporated on May 27, 1994 , 
Bank of Punjab (BOPL) was promoted by Gian Prakash, GS Mann and Inderjit Singh. 
This is one of the few individual promoted banks - the only other being Global 
Trust Bank. 

Squat attack 

Popular UK newspaper The Economist has to contend with a cybersquatter of no 
mean proportions. Type out the domain name theeconomist.com on your web browser 
and you are transported to a home page with a picture of Alan Greenspan, 
proclaiming the chairman of the Federal Reserve to be the economist of the 
year. Click on the links further and you are taken to the official website of 
the US Federal Reserve. 

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