Mumbai, Jan 25: UTI Global Bank, the new entity which will arise out of the merger between UTI Bank and Global Trust Bank, will have an estimated capital adequacy ratio of just over 11 per cent at the end of March 31, 2001. The bank has also ruled out induction of a foreign partner at the moment and expects the merger to be completed by the end of February.Speaking to The Financial Express, UTI Bank chairman and managing director Dr PJ Nayak, who will also head the new merged entity, said the rough estimates calculated so far had put the capital adequacy at over 11 per cent for the merged entity. ``We are comfortable on the capital adequacy front.
If we need more capital, we can always raise Tier-II capital later,'' Dr Nayak said.
He explained that a calculation of the exact capital adequacy was not possible immediately, since that was based on the risk weightages of individual assets of the two banks which were being merged. However, he emphasised that the capital adequacy was not going to be a problem.
Dr Nayak said the issue of bringing in a foreign partner was also not important at the moment, since the merger would create a strong bank with a healthy balance sheet. Prior to Wednesday's announcement of the merger, there was talk of both banks individually bringing in a foreign partner.
According to UTI Global's estimates, the merger formalities would, in all probability, be over by the end of February. ``There has to be three weeks notice given to shareholders. Then the time taken for mailing and clearances will have to be accounted for. This is the target,'' he said. After that is over, the new entity would formally come into being and a restrategisation exercise would commence, Dr Nayak said.
Following the merger, UTI Global would become the country's largest private sector bank with a net worth of Rs 928.82 crore, 157 branches, 321 ATMs, Rs 7,904.24 crore of advances and Rs 15,665.13 crore of deposits.
The merger of the two banks also makes competition hotter in the private banking sector, with the recent merger of ICICI Bank with Bank of Madura and the growth of HDFC Bank. The new merged entity will also have a larger range of products to cross-sell, both to corporate and retail clients. Mutual funds for tax-saving purposes, like US-64 for corporates and other schemes for retail investor can be increasingly cross-sold by the bank. This apart, the bank's upcoming foray into insurance can be targeted at existing unitholders and customers of the bank.
Copyright © 2001 Indian Express Newspapers (Bombay) Ltd.
