AN ASSIGNMENT

ON
Mergers & Acquisitions
(ICICI bank & Bank of
Rajasthan)
SUBMITTED TO
PROF S.V.Bidwai

SUBMITTED BY
MEHUL D. JOSHI
09BS0000974

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The Board of Directors of ICICI Bank and the Board of Directors of The Bank of Rajasthan
Limited (Bank of Rajasthan) at their respective Meetings held on May 23, 2010, approved the
scheme of amalgamation of Bank of Rajasthan with ICICI Bank. The amalgamation is
subject to approval of RBI and Members of both the Banks. Approval of the Members of
ICICI Bank is being sought at an extraordinary general meeting scheduled on June 21, 2010.
The proposed amalgamation would substantially enhance ICICI Bank¶s branch network,
already the largest among Indian private sector banks, and especially strengthen its presence
in northern and western India. It would combine Bank of Rajasthan¶s branch franchise with
ICICI Bank¶s strong capital base, to enhance the ability of the merged entity to capitalise
on the growth opportunities in the Indian economy.

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„„„‘  (NSE: ICICIBANK, BSE: 532174, NYSE: IBN) (formerly „
‘ 
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 ‘ ‘ „, ) is a major banking and financial services
organization in India. It is the second largest bank in India and the largest private sector bank
in India by market capitalization. The bank also has a network of 2,016 branches (as on 31
March 2010) and about 5,219 ATMs in India and presence in 18 countries, as well as some
24 million customers (at the end of July 2007). ICICI Bank offers a wide range of banking
products and financial services to corporate and retail customers through a variety of delivery
channels and specialization subsidiaries and affiliates in the areas of investment banking, life
and non-life insurance, venture capital and asset management. (These data are dynamic.)
ICICI Bank is also the largest issuer of credit cards in India. ICICI Bank's shares are listed on
the stock exchanges at BSE, NSE, Kolkata and Vadodara (formerly Baroda) ; its ADRs trade
on the New York Stock Exchange (NYSE).
The Bank is expanding in overseas markets and has the largest international balance sheet
among Indian banks. ICICI Bank now has wholly owned subsidiaries, branches and
representatives offices in 19 countries, including an offshore unit in Mumbai. This includes
wholly owned subsidiaries in Canada, Russia and the UK (the subsidiary through which the
HiSAVE savings brand is operated), offshore banking units in Bahrain and Singapore, an
advisory branch in Dubai, branches in Belgium, Hong Kong and Sri Lanka, and
representative offices in Bangladesh, China, Malaysia, Indonesia, South Africa, Thailand, the

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Unit i t nd USA. Overseas, t e Bank is targeting t e NR (Non-Resident
Indian) population in parti ular.
ICICI reported a 1.15% rise in net profit to 1,014.21 crore on a 1.29% increase in total
income to 9,712.31 crore in Q2 September 2008 over Q2 September 2007. The
bank's CASA ratio increased to 30% in 2008 from 25% in 2007.
ICICI Bank is one of the j
  j
of India, along with State Bank of India, Punjab
National Bank and Canara Bank ² its main competitors.

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In 1955, The Industrial Credit and Investment Corporation of India Limited (ICICI) was
incorporated at the initiative of World Bank, the Government of India and representatives of
Indian industry, with the objective of creating a development financial institution for
providing medium-term and long-term project financing to Indian businesses. In 1994, ICICI
established Banking Corporation as a banking subsidiary. Formerly known as Industrial
Credit and Investment Corporation of India, ICICI Banking Corporation was later renamed as
'ICICI Bank Limited'. ICICI founded a separate legal entity, ICICI Bank, to undertake normal
banking operations - taking deposits, credit cards, car loans etc. In 2001, ICICI acquired Bank
of Madura (est. 1943). Bank of Madura was a Chettiar bank, and had acquiredChettinad
Mercantile Bank (est. 1933) and Illanji Bank (established 1904) in the 1960s. In 2002, The
Boards of Directors of ICICI and ICICI Bank approved the reverse merger of ICICI,ICICI
Personal Financial Services Limited and ICICI Capital Services Limited, into ICICI Bank.
After receiving all necessary regulatory approvals, ICICI integrated the group's financing and
banking operations, both wholesale and retail, into a single entity. At the same time, ICICI
started its international expansion by opening representative offices inNew
York and London. In India, ICICI Bank bought the Shimla and Darjeeling branches
that Standard Chartered Bank had inherited when it acquired Grindlays Bank.

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In 2003, ICICI opened subsidiaries in Canada and the United Kingdom (UK), and in the UK
it established an alliance with Lloyds TSB. It also opened an Offshore Banking Unit (OBU)
in Singapore and representative offices in Dubai and Shanghai. In 2004, ICICI opened a
representative office in Bangladesh to tap the extensive trade between that country, India and
South Africa. In 2005, ICICI acquired Investitsionno-Kreditny Bank (IKB), a Russia bank
with about US$4mn in assets, head office in Balabanovo in the Kaluga region, and with a
branch in Moscow. ICICI renamed the bank ICICI Bank Eurasia. Also, ICICI established a
branch inDubai International Financial Centre and in Hong Kong. In 2006, ICICI Bank UK
opened a branch in Antwerp, in Belgium. ICICI opened representative offices
in Bangkok, Jakarta, andKuala Lumpur. In 2007, ICICI amalgamated Sangli Bank, which
was headquartered in Sangli, in Maharashtra State, and which had 158 branches in
Maharashtra and another 31 inKarnataka State. Sangli Bank had been founded in 1916 and
was particularly strong in rural areas. With respect to the international sphere, ICICI also
received permission from the government of Qatar to open a branch in Doha. Also, ICICI
Bank Eurasia opened a second branch, this time in St. Petersburg. In 2008, TheUS Federal
Reserve permitted ICICI to convert its representative office in New York into a branch. ICICI
also established a branch in Frankfurt. In 2009, ICICI made huge changes in its organisation
like elimination of loss making department and restreching outsourced staff or renegotiate
their charges in consequent to the recession. In addition to this, ICICI adopted a massive
approach aims for cost control and cost cutting. In consequent of it, compesation to staff was
not increased and no bonus declared for 2008-09.
On 23 May ICICI Bank announced that it would merge with Bank of Rajasthan through a
share-swap in a non-cash deal that values the Bank of Rajasthan at about 3,000 crore. ICICI
announced that the merger expand ICICI Bank's branch network by 25%.
On 18h October 2010, ICICI will inaugurate I-Express, an instant cross-border money
transfer option for Non-Resident Indians (NRIs). This service will be available through the
ICICI Bank's select partners in the Gulf Cooperation Council. [12]
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ICICI Bank has been in focus in recent years because of alleged harassment of customers by
its recovery agents. Listed below are some of the related news links:
6‘ ICICI Bank was fined 55 lakh for hiring goons (known coloquially as "goondas") to
recover a loan. Recovery agents had ,allegedly, forcibly dragged out a youth (who
was not even the borrower) from the car, beaten him up with iron rods and left him
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 bleeding as they drove away with the vehicle. "We hold ICICI Bank guilty of the
grossest kind of deficiency in service and unfair trade practice for breach of terms of
contract of hire-purchase/loan agreement by sei ing the vehicle illegally,""No
civilised society governed by the rule of law can brook such kind of conduct" said
Justice Kaleem, who was born in Laddhawala, Muzaffarnagar is the president of the
consumer commission.
6‘ Four ICICI loan employees arrested on theft charges in Punjab
6‘ ICICI Bank told to pay 1 lakh as compensation for using unlawful recovery
methods.
6‘ RBI warns ICICI Bank for coercive methods to recover loans
6‘ ICICI Bank drives customer to suicide - Four men including an employee of ICICI
Bank booked under sections 452, 306, 506 (II) and 34 of IPC for abetting
suicide. According to the suicide note they advised him, "If you cannot repay the bank
loan, sell off your wife, your kids, yourself, sell everything at your home. Even then if
you cannot not pay back the due amount, then it's better if you commit suicide."India
biggest private bank has compensated the life by money
6‘ ICICI Bank on huge car recovery scam in Goa - ICICI Bank invest in car-jackers to
recover loans in Goa. A half an hour investigative report on CNN-IBN's 30 Minutes.
The under cover report was executed by CNN-IBN's Special Investigations Team
from Mumbai, led by Ruksh Chatterji.
6‘ Family of Y. Yadaiah alleged that he was beaten to death by ICICI Bank¶s recovery
agents, for failing to pay the dues. Four persons were arrested in this case.
6‘ A father while talking to Times of India, alleged that "ICICI Bank recovery agents
visited his house and threatened his family. And his son Nikhil consumed poison
because of the tension".
6‘ Oppressed by ICICI Bank's loan recovery agents, Shakuntala Joshi (38), committed
suicide by hanging. The suicide note stated that she was upset with the ill-treatment
meted out by ICICI Bank's recovery agents and had thus decided to end her life.
6‘ In another case of a suicide it is alleged that µgoondas¶ sent by ICICI Bank abused
Himanshu and his wife in front of the entire residential colony before taking away his
vehicle. Feeling frustrated and insulted, he reportedly committed suicide.
6‘ C.L.N Murthy, a scientist with the Hyderabad-based Indian Institute of Chemical
Technology, was allegedly tortured by recovery agents of ICICI Bank after he
defaulted on his loan.³They humiliated me no end. They ripped my shirt, shaved my

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 moustache, cut my hair and gave electric shocks on my chest and even spat on my
face" adds Murthy.
6‘ A dozen recovery agents of ICICI Bank, riding on bikes, allegedly forced a
prominent lawyer, Someshwari Prasad, to stop his car. They held Prasad at gunpoint
and also slapped him to force him. A manager of the ICICI Bank branch, Rakesh
Mehta, along with four other employees were arrested.
6‘ In a landmark case, Allahabad High Court had ordered registration of anFIR against
ICICI Bank's branch manager, President, Chairman and Managing Director on a
complaint of 75-year-old widow Prakash Kaur. She had complained that ³goondas´
were sent by the bank to harass her and forcibly took away her truck.When the
Supreme Court wanted to know about the procedure adopted by the Bank, ICICI Bank
counsel said notice would be sent to a defaulter asking him either to pay the
instalments or hand over the vehicle purchased on loan, failing which the agents
would be asked to seize it. When the Bench pointed out that recovery or seizure could
be done only legally, ICICI Bank counsel said, "If we have to go through the legal
process it would be difficult to recover the instalments as there are millions of
defaulters".
6‘ Taking strong exception to ICICI Bank's use of 'goondas' against a defaulter, the
president of Consumer Disputes Redressal Forum said, "The fact leaves us aghast at
the manner of functioning and goondaism in which the bank is involved for a petty
amount of 1,889... such attitude is deplorable and sends chills down the spine....The
bank had the option to recover dues through legal means. They have no legal right to
snatch the vehicle in such a manner which amounts to robbery,". In this case recovery
agents pointed a pistol at a defaulter when he tried to resist. ICICI bank argued that
they had taken peaceful possession of the vehicle "after due intimation to the
complainant as he was irregular in remitting the monthly instalments". But the court
found out that the records proved otherwise.
6‘ Two senior ICICI Bank officials were booked for abducting one Vikas Porwal from
his house and keeping him hostage in the Bank's premises.
6‘ The credit card division of the ICICI Bank allegedly threatened a senior citizen in
Chandigarh with a fictitious arrest warrant on account of a default that never was.
6‘ A Consumer Commission has asked ICICI Bank MD K V Kamath to appear before it
in respect a complaint. A borrower on protesting against the forceful dispossession of




 his car, as seen in the post-incident photographs, was roughed up and sustained
injuries.
6‘ An 18-year-old boy was allegedly kidnapped and detained at the Pune branch of
ICICI Bank.
6‘ There have been several other minor legal cases accusing harassment by ICICI Bank
6‘ A consumer court imposed a joint penalty of 25 lakh on ICICI Bank and American
Express Bank for making unsolicited calls.
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Bank of Rajasthan is a listed old Indian private sector bank with its corporate office at
Mumbai in Maharashtra and registered office at Udaipur in Rajasthan. At March 31, 2009,
Bank of Rajasthan had 463 branches and 111 ATMs, total assets of Rs. 172.24 billion,
deposits of Rs. 151.87 billion and advances of Rs. 77.81 billion. It made a net profit of Rs.
1.18 billion in fiscal 2009 and a net loss of Rs. 0.10 billion in the nine months ended
December 31, 2009. Around 40% of the branches of the Bank of Rajasthan are locatedin
rural and semi-urban areas.It was set up at Udaipur in 1943 with an initial capital of Rs.10.00
lacs. An eminent Industrialist Late Seth Shri Govind Ram Seksaria was the founder
Chairman. It was classified as the Scheduled Bank in 1948. The Bank also established a rural
(Gramin) bank Mewar Anchlik Gramin Bank in Udaipur District in Rajasthan on 26th
January, 1983.

The bank's central office is located at Jaipur, while registered office is in Udaipur. Presently
the bank has 463 branches. RBI was critical of BOR's promoters not reducing their holdings
in the company. BOR has been merged with ICICI Bank. ICICI paid Rs.3000 Crores for it.
Each 118 shares of BOR will be converted into 25 shares of ICICI Bank

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ICICI Bank, the country¶s largest bank in terms of market capitalisation, has signalled a
reversal in its strategy of balance sheet contraction, which it had adopted for over a year now.
The company¶s board has approved Bank of Rajasthan¶s (BoR) amalgamation with itself,
which will give it access to the latter¶s network of 463 branches and a Rs 7,781-crore loan
book as on 31 March 2009.
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BoR shareholders will get one share of ICICI Bank for every 4.72 shares
of BoR they hold. They have reason to cheer: a day before the deal was announced, BoR
shares were trading at Rs 83. At this price, the value of 4.72 shares of BoR would be Rs 392.
At the same time, ICICI Bank was offering one share for Rs 900, or at a premium of over 100
per cent. So, as a result of the premium that the BoR shares were assigned, its price shot up
19 per cent on the day the deal was announced. Market participants felt that ICICI Bank, on
the other hand, was overpaying for BoR¶s assets and its share price slid. As we go to press,
BoR¶s price touched Rs 160 and ICICI Bank was down to Rs 809.

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 BoR has a small asset base, with its loan size just a fifth of ICICI Bank.
However, it has 463 branches, which is 23 per cent of ICICI¶s current network of around

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2,000 branches. This means, the amalgamation would result in an immediate 23 per cent
growth in the ICICI Bank¶s branch network.
‘    Further, as BoR started operations in Rajasthan, over half of its branches are
located there. This bodes well for ICICI Bank, which has little presence in Rajasthan. In
addition, these are smaller cities and rural areas where the scope of increasing (current and
savings accounts) CASA deposits is high. BoR, until recently, has failed in that regard
(CASA ratio is 27.4).
The amalgamation should help the new ICICI Bank mobilise CASA deposits through BoR¶s
extensive branch network in Rajasthan.

   BoR is an old and relatively less efficient bank with a cost-to-income ratio of
62 per cent. For ICICI Bank, the ratio is around 37.6 per cent. Noted Alpesh Mehta and Parag
Jariwala, analysts at Mumbai-based financial services firm Motilal Oswal, in a report: ³There
is plenty of scope to improve the efficiency of BoR¶s existing branch network.´ This would
certainly add to the merged entity¶s bottomline in the coming years.

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‘   Though ICICI Bank could derive several benefits from BoR,
comparing the deal with previous amalgamations in the banking industry should give an idea
if it is overpaying. Let¶s take the case of HDFC Bank¶s acquisition of Centurion Bank of
Punjab (CBoP). Analysts at financial services firm Angel Securities say HDFC¶s
consideration per branch of CBoP was Rs 24.1 crore. In contrast, ICICI Bank is paying Rs
6.6 crore for every branch of BoR. Based on that, the acquisition looks cheap. However, the
analysts have also calculated market capitalisation per branch of the existing old banks, and
the average is Rs 5.4 crore. So, based on this measure, the acquisition looks slightly
expensive.
 ‘   Assigning valuations is an individual¶s call, but there could be larger
corporate governance issues associated with BoR. The RBI had earlier appointed an audit
firm to conduct special audit of books and accounts of the bank. Reassessment of its books by
ICICI Bank could uncover more non-performing assets (NPAs). BoR¶s asset quality could
also be a concern. Its asset size is tiny compared to ICICI Bank. So, its impact on ICICI
Bank¶s asset quality would be negligible. However, any negative news flow related to BoR¶s
asset quality will have the potential to depress ICICI Bank¶s share price.
Faced with angry regulators, the Tayal family, which controls Bank of Rajasthan (BoR),
decided to merge the old private sector bank with the country¶s second-largest lender, ICICI
Bank. This is the third acquisition by ICICI Bank in the last decade. Both the bank boards
have given an in-principle nod to the merger. ICICI Bank has started a due diligence exercise

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on BoR from Tuesday. ET had first reported the merger talks between the two banks in its
edition dated May 6. Speaking to ET, ICICI Bank MD & CEO Chanda Kochhar said, ³We
have reached an indicative pricing with the promoters on a swap ratio of 25:118. (A BoR
shareholder will receive 25 ICICI shares for every 118 BoR shares held.) This is, however,
subject to due diligence. Our understanding of the strategic value is that it would have taken
us three years to build the current account and savings account relationships. Also, the deal
prices the market capitalisation per branch in the range of around Rs 6.5 crore, which is
similar to other old private sector banks.´

In the case of HDFC Bank , which acquired Centurion Bank of Punjab , the price per branch
was around Rs 26 crore.
³It was a brief board meeting. An in-principle approval has been taken to amalgamate the
bank with ICICI Bank. The majority shareholder is looking at swapping his official
shareholding of 28.60% with ICICI Bank shares. Other details on valuation and share swap
will be decided on May 24,´ said BoR MD & CEO G Padmanabhan.
The Tayals, who acquired BoR a decade ago in a messy transaction, are believed to be under
pressure to sell the old private bank amid regulatory action by Sebi and RBI. Mr
Padmanabhan was appointed by RBI, which recently slapped a fine on BoR for a string of
violations including deletion of records in the IT system, shady property deals and
irregularities in a particular corporate group account. Sebi, on the other hand, has put a
question mark on the shareholding of BoR. Though BoR promoters say they hold a 28.60%
stake in the bank, Sebi has put the promoter shareholding at 55.01%. In March, Sebi had
banned 100 entities allegedly holding BoR shares on behalf of the promoters from all stock
market activities. Under the circumstances, Tayals may have to sort out the issues with Sebi
to execute the deal with ICICI. The indicative price of Rs 188 according to the share swap
would be a steep jump compared with the current market price. The ICICI Bank scrip on
Tuesday closed at Rs 889.35 on the Bombay Stock Exchange, down by 1.45% while the BoR
scrip rose sharply by 19.95% to Rs 99.5. The current market capitalisation of the bank is
around Rs 1,604 crore and a price of Rs 188 would value BoR at Rs 3,032 crore.

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Given ICICI Bank¶s market capitalisation of Rs 99,125 crore, the bank will have to dilute its
equity by less than 3%. ICICI Bank will propose a share-swap transaction with BoR.
According to Ms Kochhar, ³CASA (current and savings account) is the main driver of growth
and it is really going to be driven by branch network. We are at a stage where we are
continuing to grow our branches. The deal will give us another 500 branches and some of it
are in locations where we are not present. After the Bank of Madura merger, our branch
presence in the South improved substantially, while post the Sangli Bank merger our
presence in Maharashtra improved. This deal will help us improve our presence in north
India. It will also give us the ability to grow CASA and push inclusive banking .´
In a major acquisition deal, ICICI Bank on Sunday announced merger Bank of
Rajasthan with it through share-swap in a non-cash deal that values the BoR at about Rs
3,000 crore. After the approval of the deal by the boards of the two banks, ICICI Bank
Managing Director and CEO Chanda Kochhar said, "It is a win-win situation for
shareholders. Just by dilution of three per cent of our equity, we will get Bank of Rajasthan
and it will expand our network by one fourth."
Announcing the deal, she said that the merger would be through offering 25 shares of ICICI
for every 118 shares of BoR but its promoters Tayal Family which hitherto have over 50 per
cent stake would not get a board seat in the amalgamated entity.
"Present ICICI Board would continue as it is," she said adding that the deal works out to
about Rs 3,000 crore but "there is no cash outgo." It may be recalled that Bank of Rajasthan
share prices nearly doubled in the last four trading sessions after the two lenders agreed in
principle for the merger. She said shareholders' approval for the deal would be obtained at the
Extraordinary General Meeting on June 21.
"After this, we will move the Reserve Bank for its approval," she said adding that "as per our
legal advise we do not need to go to the government for the approval of the Foreign
Investment Promotion Board."
When contacted BoR's dominant share holder Pravin Tayal, who was asked by RBI to dilute
family's over 55 per cent equity to about 10 per cent, said that "no decision" has been taken
on his representation in ICICI after the merger.

The proposal was approved in-principle by the boards of the two banks. In a statement, ICICI
Bank said it had entered into an agreement with certain shareholders of BoR.
The swap indicates that ICICI bank is paying a 90 per cent premium over BoR stock¶s
closing price of Rs 99.50 on the Bombay Stock Exchange on Tuesday. The BoR stock

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touched a 52-week high on Tuesday, soaring 20 per cent. ICICI Bank¶s shares closed 1.45 per
cent lower at Rs 889.35 on a day when the benchmark Sensex rose by 0.24 per cent.
³The valuation implied by the share exchange ratio is in line with the market capitalisation
per branch of old private sector banks in India,´ ICICI Bank said in the statement. ³It also
compares favourably with relevant precedent transactions. The final determination of the
share exchange ratio is subject to due diligence, independent valuation and approvals.´ Due
diligence and valuation by an independent valuer will be undertaken now.
BoR Managing Director G Padmanabhan said after the board meeting that Haribhakti & Co
has been appointed jointly by both the banks to assess the valuation.The banks would seek
regulatory approval from the Securities and Exchange Board of India (Sebi) as well as the
Reserve Bank of India at an appropriate time, he said, adding that the ³swap ratio was not
discussed at the board meeting´.
The move to merge BoR with ICICI Bank comes in the wake of regulatory pressure mounted
on the Tayals, who according to Sebi, hold nearly 55 per cent stake in the bank. At the end of
2009, the promoters held a 28.6 per cent stake in the bank, according to stock exchange data.
Nearly 100 entities related to the Tayals were barred from dealing in securities.
oR has a market capitalisation of Rs 1,600 crore compared with ICICI Bank¶s Rs 99,000
crore. It reported a net loss of Rs 44.7 crore for the quarter ended December 2009 on a
revenue of Rs 344.83 crore.
In terms of assets, ICICI Bank is around 25 times as large as BoR. In terms of branch
network, BoR with 463 branches, is less than one-fourth of ICICI Bank¶s network.
Analysts said the takeover would help ICICI Bank in expanding its footprint further, which is
in line with its new-found branch-focused strategy. As most of BoR branches are
concentrated in northern India, ICICI Bank would gain deeper access in these markets.
Since 1997, when it acquired ITC Classic, ICICI Bank has periodically merged banks with
itself to increase its reach.
P K Tayal, the main promoter of BoR said the deal was a win-win solution for everyone and
the agreement with ICICI Bank envisaged that the bank¶s employees would get the same
position in the merged entity.
While analysts do not expect an adverse impact of the merger on ICICI Bank, they were
worried about the lack of clarity on the legal liabilities of BoR.
They, however, said that based on December numbers, bad debts appeared to be under
control for BoR.

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³But given that the fourth quarter numbers are not announced for Bank of Rajasthan, and the
controversy shrouding it, there are some worries,´ said an analyst at a large Indian brokerage.
While Tayals have been under regulatory scanner for a while, pressure intensified earlier this
year when Sebi accused them of misleading investors about the shareholding pattern of the
bank.
In February, RBI also slapped a fine of Rs 25 lakh on the bank following violations related to
know-your customer (KYC) guidelines, acquisition of immovable property, deletion of
records in the bank¶s IT system, irregularities in the conduct of accounts for certain
companies and for failure to present documents to the regulator. It has also ordered a special
audit of the books of the bank, after it found lapses in corporate governance and disclosure
norms.
Subsequently, the Tayals, who have been under pressure to lower their stake in the bank to
RBI-prescribed level of 10 per cent, were forced to start looking at options to exit BoR.
reholders of the troubled Bank of Rajasthan Ltd (BoR) are set to get 25 shares of ICICI Bank
Ltd for 118 shares of BoR in the ratio of 4.72:1, after the boards of the two banks decided to
go ahead with a merger.

BoR promoter Pravin Kumar Tayal termed the proposed merger as a ³win-win´ situation for
all²the banks, their employees and investors.
In a day of high drama, BoR stock rose 19.95% on the Bombay Stock Exchange to close at
Rs99.50, its year high, and after trading hours, the bank sent a release to the stock exchanges
saying its board will meet in the evening to discuss a proposal of merging the bank with
ICICI Bank.

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Boads of both banks met in the evening separately, and after the meeting ICICI Bank sent a
release, saying, it ³has entered into an agreement with certain shareholders of Bank of
Rajasthan agreeing to effect the amalgamation of Bank of Rajasthan´ with itself.
ICICI Bank stock was down 1.45% to Rs889.35.
³The final determination of the share exchange ratio is subject to due diligence, independent
valuation,´ ICICI Bank said.
Most banking analysts said the currently proposed swap ratio is highly favourable to Bank of
Rajasthan shareholders. A back-of-the-envelope calculation by analysts values the deal at
more than Rs3,000 crore and per branch acquisition cost at Rs7 crore for ICICI Bank, almost
equivalent to ICICI¶s per branch opening cost.
This will be ICICI Bank¶s third acquisition after Bank of Madura in 2000-01 and Sangli Bank
in 2006-07. The first acquisition helped ICICI Bank step up its presence in the south and the
second in the west. The BoR acquisition will strengthen its network in northern as well as
western India. BoR has a network of 463 branches and 111 ATMs. About 60% of its
branches are in Rajasthan. ICICI Bank, India¶s largest private sector lender, has a network of
2,009 branches and 5,219 ATMs. ICICI Bank has an asset base of Rs3.63 trillion and posted
a net profit of Rs4,025 crore in 2010. BoR¶s asset base is Rs17,224 crore and in first nine
months of fiscal 2010, its net loss was Rs9.82 crore. It posted a net loss of Rs44.70 crore for
the December quarter and has not announced March quarter earnings.
BoR¶s net non-performing assets as a percentage of total loans in December was 1.05%. The
comparable figure for ICICI Bank for the year-end is 1.55%.
³The proposed amalgamation would substantially enhance ICICI Bank¶s branch network,
already the largest among Indian private sector banks, and especially strengthen its presence
in northern and western India. It would combine Bank of Rajasthan¶s branch franchise with
ICICI Bank¶s strong capital base,´ the ICICI Bank release said.
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