1. INTRODUCTION
On November 20, 2014, Kotak Mahindra Bank (KMB) announced a $2.4 billion all-share deal to acquire ING Vysya. With this deal which is expected to close in the second half of 2015, Kotak would claim the fourth position as the largest private lender in India, after ICICI Bank, HDFC Bank and Axis Bank.
Founded in 1985 as Kotak Mahindra Finance Ltd., the group's flagship company was given the license for banking business by the Reserve Bank of India (RBI) in February, 2003 making it the first ever company in the Indian banking history that converted to a bank. Headquartered in Mumbai, Maharashtra, with over 600 branches and over 1,100 ATMs spread across 354 locations, it is the fourth largest private sector bank by market capitalization in India. …show more content…
With the merger, KMB will achieve strong presence in South India too, since ING Vysya Bank has 64 per cent of its branches in this region. iii) LOAN PORTFOLIO: The balance sheets of the two banks with their advances and liabilities profile are quite similar. Also, branch composition in urban/metro and rural areas is also common for both. This merger would enable loan-book diversification and enhance Kotak Mahindra Bank's presence in the small and medium enterprise (SME) segment as 38 per cent of ING Vysya Bank’s loan book comprises SME loans. Currently, only eight per cent of Kotak’s loans are in this segment. iv) FEE-BASED & OTHER INCOME: Given ING NV’s parentage, ING Vysya Bank offers many trade finance and foreign exchange products. Hence, this merger would increase Kotak Mahindra Bank's fee income and enable it to deploy its capital for higher number of 'off-balance sheet' fee income-generating activities. A look at the profitability ratios of the two banks tells us that the burden efficiency ratio of Kotak is 1.34% while that of ING stands at 1.07%. The ratio for the merged entity would be
On November 20, 2014, Kotak Mahindra Bank (KMB) announced a $2.4 billion all-share deal to acquire ING Vysya. With this deal which is expected to close in the second half of 2015, Kotak would claim the fourth position as the largest private lender in India, after ICICI Bank, HDFC Bank and Axis Bank.
Founded in 1985 as Kotak Mahindra Finance Ltd., the group's flagship company was given the license for banking business by the Reserve Bank of India (RBI) in February, 2003 making it the first ever company in the Indian banking history that converted to a bank. Headquartered in Mumbai, Maharashtra, with over 600 branches and over 1,100 ATMs spread across 354 locations, it is the fourth largest private sector bank by market capitalization in India. …show more content…
With the merger, KMB will achieve strong presence in South India too, since ING Vysya Bank has 64 per cent of its branches in this region. iii) LOAN PORTFOLIO: The balance sheets of the two banks with their advances and liabilities profile are quite similar. Also, branch composition in urban/metro and rural areas is also common for both. This merger would enable loan-book diversification and enhance Kotak Mahindra Bank's presence in the small and medium enterprise (SME) segment as 38 per cent of ING Vysya Bank’s loan book comprises SME loans. Currently, only eight per cent of Kotak’s loans are in this segment. iv) FEE-BASED & OTHER INCOME: Given ING NV’s parentage, ING Vysya Bank offers many trade finance and foreign exchange products. Hence, this merger would increase Kotak Mahindra Bank's fee income and enable it to deploy its capital for higher number of 'off-balance sheet' fee income-generating activities. A look at the profitability ratios of the two banks tells us that the burden efficiency ratio of Kotak is 1.34% while that of ING stands at 1.07%. The ratio for the merged entity would be