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M&A buzz in the banking space
Nov 22, 2014


Sticking to the banking sector, the big news of late has been the merger between two corporate entities - Kotak Mahindra Bank and ING Vysya Bank. The way their respective stocks have reacted to this news indicates that the market has given a double thumbs up to the deal.

In fact, such a major merger in the sector comes after a gap of over four years. The last was between ICICI Bank and Bank of Rajasthan which took place in May 2010. Today's chart of the day shows the historical acquisition values of some of the major banking deals. As reported by the Economic Times, the acquisition value of the latest deal stands at Rs 151 bn which is the largest ever deal seen in the Indian banking space.

While the aim of the banks would be to gain a larger customer and deposit base, essentially the synergies would be gauged by combing a lot of other parameters such as the asset quality, increase in presence in terms of branches and network, amongst others. In case of the Kotak and ING merger, what is key over here is the fact that post the merger, Kotak Mahindra Bank gets a strong presence in the southern market; prior to the deal it had 80% of its branches in the north and western markets, while ING Vysya had about 65% of its branches based in southern India. Further even in terms of capital adequacy, margins and asset quality, the entities will together go on to make a relatively stronger bank.

Data Source: Economic Times
OBC= Oriental Bank of Commerce; GTB = Global Trust Bank; BoR = Bank of Rajasthan; CBoP = Centurion Bank of Punjab

This Chart Of The Day was published in The 5 Minute WrapUp - The secret to finding best growth stocks

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