ING deal precursor to 'Achche Din': Uday KotakNew Delhi: Taking a leaf out of Prime Minister Narendra Modi's poll campaign, eminent banker Uday Kotak said that the Rs 15,000-crore merger between Kotak Mahindra Bank and ING Vysya Bank is a precursor to
New Delhi: Taking a leaf out of Prime Minister Narendra Modi's poll campaign, eminent banker Uday Kotak said that the Rs 15,000-crore merger between Kotak Mahindra Bank and ING Vysya Bank is a precursor to 'Achche Din' and would create a world-class financial institution of size and scale.
The all-share deal, for which he expects all necessary regulatory approvals by March 2015, would create India's fourth largest bank with a combined balance-sheet size of over Rs 2 lakh crore and market value of over Rs 1 lakh crore.
Kotak, who heads nearly 12-year-old Kotak Mahindra Bank, also allayed concerns that the merger would result into any job losses and said that the synergies from the transaction would instead provide new growth opportunities for staff of the two banks and also create new jobs over a period of time.
"This is a merger for growth and a merger for 'achche din' coming. This deal is for a belief that the future of India over the next ten years is bright and for that we need to create capacity and build muscles.
"This is the time to build financial institutions which are able to meet India's future needs. If India is on a marathon growth track over the next ten years, we in the banking industry have to prepare ourselves for that and this merger is a step towards that," Kotak told PTI in an interview here.
Kotak also expressed confidence that the deal would provide significant opportunities for international cooperation, in addition to huge synergies in domestic markets and in various product segments and on digital platform.
Post the merger, Dutch financial services giant ING, currently the main promoter of over 80-year-old ING Vysya Bank, would become a shareholder in the merged entity and would remain invested for minimum one year.
"The main purpose of doing this is that we believe that there is a significant compatibility between the two banks.
"Kotak Mahindra Bank has very significant presence in the West and the North and our total branch network between these two regions is 80 per cent and in case of ING Vysya Bank, their network in South is 64 per cent of their total branch network.
"Therefore it is almost like a perfect fit if you look at the two branch networks together. We have a total of 1,200 branches combined. Therefore, it enables us to focus on building synergies together. We also see a very significant opportunity in products and distribution together.
"For example, Kotak Mahindra Bank is a very significant lender and the largest bank financier in the tractor finance business. ING Vysya Bank has a very limited presence in tractor finance, but it has got a large number of branches in South including 170 branches in erstwhile Andhra Pradesh, which is one-third of their network," he added.