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Having sealed a mega deal to merge ING Vysya Bank with itself, Kotak Mahindra Bank's chief Uday Kotak said consolidation is very important for growth of banking industry and to meet financing needs of the country.
The banking industry is largely fragmented in India with 46 commercial banks, nearly half of which are state-run entities, but only two of them figure among the world's 100 largest banks.
Besides, there have not been many mergers in Indian banking space and the merger of ING Vysya Bank with Kotak Mahindra Bank is the first major deal since private sector leader ICICI Bank's takeover of Bank of Rajasthan about four years ago.
"Frankly speaking, consolidation is very important in Indian banking industry because to finance India's future financing needs, you need banks of size and this is one step towards that," Kotak told PTI in an interview here.
The all-share transaction to merge ING Vysya Bank would create India's fourth largest private sector bank after ICICI Bank, HDFC Bank and Axis Bank. Incidentally, acquisitions have played a key role in growth of the two largest lenders.
"If you just look at our balance sheet on combined basis, it is Rs 2 lakh crore and the market cap will be over Rs 1 lakh crore," Kotak said, while explaining the upside from the merger valued at over Rs 15,000 crore.
"If you look at the private sector, we will be the fourth largest and we see a significant upside. We are very well capitalised and we would not need any additional capital and therefore there is no plans to have any dilution in short to medium term. Our ability to grow is significant," he added.
Asked about the future growth prospects and whether the merged entity would be one of the global banks from India in next five years, he said, "The key thing and our internal mantra is bigger, bolder and better.
"So, we have to be bigger, we have to be bolder and we have to be better. Around this theme, we want to build a financial institution out of India which the country should be proud of.
"Size is important, but the quality of a financial institution in terms of what it does is also very important and this would include quality of our products, quality of our service and customers and that is much more important in my mind. Having said that, size is important to relevance too."
On positioning of the merged entity, Kotak said, "We are going to position ourselves as a world-class financial institution. We want to do things that are comparable to the best in the world. At the same time, we want to have a very strong human qualities. On combined basis, we would have 40,000 employees."
He expects the deal to get all necessary approvals by end of March 2015.
