MERGER OF GTB WITH OBC

Abstract

Strengthening the banking system has been one of the central issues facing emerging markets and developing economics. In India, the banking industry is currently in a transition phase. On the one hand, the PSBs, which are the mainstay of the Indian Banking system, are in the process of shedding their flab in terms of excessive manpower, excessive non Performing Assets (NPAs) and excessive governmental equity, while on the other hand the private sector banks are consolidating themselves through mergers and acquisition. However there had been a few hiccups for these new banks with many either being taken over or fewother s finding the going tough. This case is aimed at finding out the strategic issues that led to the merger of Global Trust Bank, a private sector commercial bank in OBC. GIB was facing several problems including asset-liability mismanagement, inadequate growth in good assets and income to cover the bad assets, heap of non-performing assets, reckless lending to stockholders treading the risky edge of the capital market, negative capital adequacy ratio and eroded net worth. Taking into account the interests of the millions of depositors of GTB, as well as the bank's strengths and weaknesses. Reserve Bank of India declared the amalgamation of G1B with OBC. This case will analyze the pre and post merger position of OBC with the intention of finding out the effect of merger on OBC. The case will also deal with issues and problems with regard to strategy, operations and HR, as faced by OBC.Keywords: Non-performing Assets, Capital Adequacy Ratio, Transparency and Regulatory Authority, Merger, Strategy