Quick IDBI-UWB integration must
In order to reap the benefits of the proposed amalgamation with United Western Bank (UWB), the key remains how fast the integration of the Satara-based bank with IDBI is undertaken, feel analysts.
‘‘Given the level of non-performing assets of UWB, IDBI may have to inject Rs 200-300 crore for provisioning. Furthermore, it have to pay the shareholders upfront, the benefit of which would come later.
This kind of merger ideally takes a couple of years, as also was evident in the Global Trust Bank (GTB) and Oriental Bank of Commerce (OBC) mergers. The key to merger would be fast track integration with the bank,” said an analyst with IL&FS Investsmart.
According to RBI figures, the net NPA of UWB stood at Rs 493 crore or 13.84% as on July 31, 2006. Analysts also feel that the issue is not yet over and any institution has the right to object the proposed amalgamation by offering a better deal. Meanwhile, both the banks have informed the stock exchange about their meeting to decide the proposed amalgamation.
While, UWB board would meet on September 14, IDBI would take up the decision to its board on September 21.
‘‘Meeting of the board of directors of IDBI will be held on September 21 to consider the draft scheme of amalgamation and convey its views to RBI”, IDBI said in a statement Wednesday.
As per the RBI, both banks have been given time upto September 27 to consider the draft scheme.
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