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The
consolidation in the Banking Industry seems to be happening
at a faster pace. What are the forces that are hastening
this process?
HDFC
Bank and the Times Bank tied the merger knot last year.
The coming together of two like-minded Private Banks
for mutual benefit was a landmark event in the history
of Indian Banking. Many analysts viewed this action
as the opening of the floodgate of a spate of mergers
and consolidations among the banks, but this was not
to be, it took nearly a year for another merger. The
process of consolidation is a slow and painful process.
But the wait and watch game played by the banks seems
to have come to an end.
With
competition setting in and tightening of the prudential
norms by the apex bank the players in the industry seem
to be taking turns to merge.
It
was the turn of the Bank of Madura to integrate with
ICICI Bank. This merger is remarkably different from
the earlier ones. It is a merger between banks of two
different generations. It marks the beginning of the
acceptance of a merger with old generation banks, which
seemed to be out of place with numerous embedded problems.
For one, it was a means to survive and get out of the
old order and for another it was a chance to acquire
a critical mass and for both it was a chance to generate
and reward wealth to their shareholders. This time it
was the turn of two young banks Global Trust Bank and
UTI Bank to announce a merger. For them the proposed
merger meant attaining critical size. |
