The boards of GTB and UTI Bank will meet this Saturday to approve of the merger. SBI Capital Markets did the independent valuation and acted as advisor to both the banks. UTI was also the architect of the deal.

Further, while the present UTI Bank chairman and managing director PJ Nayak will head UTI Global Bank as chairman and managing director, GTB's Ramesh Gelli will get a place on its board, and will also head the insurance venture of UTI Global Bank. UTI, which will be the principal shareholder in the merged entity, will also pick up a stake in the insurance venture while the third partner will be a foreign player. The current executive director of GTB, S Subasri, will hold the same rank in UTI Global Bank.

Once through, the combined entity will have a networth of Rs 928.82 crore, 157 branches, 321 ATMs, Rs 7,904.24 crore in advances and Rs 15,665.13 crore in deposits based on the December 31, 2000 balance-sheet of these two banks.Said UTI chairman PS Subramanyam: "It is a merger among equals... the merger between the two banks will create shareholder value. The new entity will effectively combine the strengths and complementary features of the two banks. It will be strongly capitalised with a networth that will be in excess of Rs 1,000 crore be end-March 2001."

With the merger now being announced, all eyes are on the swap ratio which will come about. On Wednesday, the GTB stock hit the two upper circuits of 8 per cent each on the Bombay Stock Exchange (BSE), with the price soaring to Rs 93.95 and remained locked at that level throughout the day. The UTI Bank stock closed at Rs 49.85 on the exchange. Analysts estimate the swap ratio to be two shares of UTI Bank for every one share of GTB.

As on March 31, 2000, GTB had a share capital of Rs 121.36 crore with deposits at Rs 6,198.85 crore and advances at Rs 3,211.01 crore. Its book value was Rs 43.52 with EPS at Rs 8.74. In the case of UTI Bank, share capital stood at Rs 131.90 crore, deposits at Rs 5,720 crore and advances at Rs 3,506.62 crore. The bank's book value and EPS stood at Rs 18.16 and Rs 3.73 respectively.

The upcoming merger will be the third among the new-generation private-banks. Past mergers included the Times Bank-HDFC Bank, and more recent Bank of Madura-ICICI Bank. With size, and reach increasingly getting critical, the ground rules in banking had changed. Enhanced balance-sheet footing had become critical and mergers were the only way out.

Mr Subramanyam said: ``SBI Capital Markets has also played a stellar role in this.''

The stock price movement of the two bank stocks have also shown an interesting pattern since the beginning of the new year with considerable increase in volumes at both these counters of late.