Kotak Mahindra Bank jumped 6.78% and ING Vysya Bank gained 1.58% at 09:18 IST on BSE after the former approved a merger deal with the latter.
Kotak Mahindra Bank jumped 6.78% to Rs 1,235.55 after scaling a record high of Rs 1,260.90 in intraday trade today, 21 November 2014. On BSE, so far 1.72 lakh shares were traded in the counter.
Shares of ING Vysya Bank gained 1.58% to Rs 827.05. The stock scaled a record high of Rs 864.80 in intraday trade on Thursday, 20 November 2014. On BSE, so far 1.35 lakh shares were traded in the counter.
Meanwhile, the S&P BSE Sensex was up 4.67 points or 0.02% at 28,072.23
The Board of Directors of Kotak Mahindra Bank (Kotak) and the Board of Directors of ING Vysya Bank (ING Vysya) at their respective meetings held on Thursday, 20 November 2014 have approved an all-stock amalgamation of ING Vysya Bank with Kotak Mahindra Bank. The announcement was made after market hours on Thursday, 20 November 2014.
Upon obtaining all approvals, when the merger becomes effective, ING Vysya will merge with Kotak. As per press release, shareholders of ING Vysya will receive shares of Kotak in exchange of shares in ING Vysya at the approved share exchange (swap) ratio. All shareholders of Kotak and ING Vysya will participate thereafter in the (merged) Kotak business. All ING Vysya branches and employees will become Kotak branches and employees. ING Vysya's CEO designate, Mr Uday Sareen, will be inducted into the top management of Kotak reporting directly to Uday Kotak, Executive Vice Chairman and Managing Director of Kotak, both the banks said in press release.
Accordingly ING Vysya shareholders will receive 725 shares in Kotak for 1,000 shares of ING Vysya. The proposed merger would result in issuance of approximately 15.2% of the equity share capital of the merged Kotak. One of ING Vysya's directors will be joining the Board of Directors of Kotak.
In terms of strategic rationale and benefits, Kotak, with 641 branches and relatively deeper presence in the West and North, has a differentiated proposition for various customer segments including HNIs, deep corporate relationships including emerging corporates, a wide product portfolio, including agricultural finance and consumer loans, and a robust capital position. ING Vysya has a strong customer franchise for over 8 decades, with a national branch network of 573 branches and deep presence in South India, particularly in Andhra Pradesh, Telengana and Karnataka. ING Vysya has a large customer base across all segments. It is particularly noted for a best-in-class SME Business, as also for serving large international corporates in India by access to the international relationships of ING Group.
The combined Kotak will have 1,214 branches, with a wide-spread pan-India network, getting both breadth and depth given the strong geographic complementarity between Kotak and ING Vysya. Substantial efficiencies will arise out of the proposed merger, which is likely to result in significant benefits for all stakeholders, be it shareholders, employees or customers, and ultimately the banking Industry, the press release indicated.
Commenting on the announcement, Uday Kotak, Executive Vice Chairman and Managing Director, Kotak Mahindra Bank, said - The opportunities and synergies that this merger will create will place Kotak and its incoming stakeholders from ING Vysya on a new trajectory of excellence and leadership.
Commenting on the announcement, Mr. Shailendra Bhandari, presently MD & CEO of ING Vysya Bank, said -- Our customers will see tremendous value from the combined entity as we fill the gaps, in terms of a much larger footprint and a complete product suite, both national and international. Together, both companies will participate in the growth of one of India's strongest and most successful banking franchises.
ING Vysya Bank is a leading private sector bank with retail, private and wholesale banking platforms.
Kotak Mahindra Group is one of India's leading financial services conglomerates. The group offers a wide range of financial services that encompass every sphere of life. From commercial banking, to stock broking, mutual funds, life insurance and investment banking, the Group caters to the diverse financial needs of individuals and the corporate sector.
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