GTB to be merged with OBC

ess Trust of India / Mumbai/New Delhi July 26, 2004

The Reserve Bank of India (RBI) today announced that Global Trust Bank (GTB) will be amalgamated with Oriental Bank of Commerce (OBC).

The scheme of amalgamation would be put on the RBI website, and RBI and Sebi are looking to proceed forward in the matter expeditiously, RBI executive director Usha Thorat said.

The scheme of amalgamation would be available for comments till August 7, she added.

There will be no swap arrangement for GTB shareholders when the private sector bank is amalgamated with OBC.

OBC had made the offer for the merger proposal as it perceived synergy between the two banks, Thorat said, adding the merger will be effective once the government sanctions the scheme of amalgamation.

The central government had, on July 24, placed GTB under moratorium for a three-month period till October 23, partially freezing its operations following "wrong" financial disclosures.

The central bank, yesterday, had said it will provide support for permitted cash withdrawals and allow operation of safe deposit lockers and demat accounts as usual even as depositors rushed to withdraw funds from branches across the country.

"We are in touch with RBI and moving fast on the matter (merger)," B.D. Narang, chairman of Oriental Bank, said. He assured that stakeholders' interests would be looked after in the scheme of amalgamation.

Oriental Bank of Commerce (OBC) witnessed sharp volatility on the stock market in morning deals.

The stock, which opened at Rs 263, slipped to a low of Rs 247 before bouncing back to touch a high of Rs 283 on the BSE  after the RBI announced the amalgamation of Global Trust Bank (GTB) with the bank.

The stock was trading at Rs 269 (up Rs 6 or 2.26%) with a volume of over 33.73 lakh on BSE.

GTB, which opened at Rs 13, is frozen at the lower circuit breaker of 20% at Rs 10 - down Rs 3.

Raamdeo Agarwal, joint managing director of Motilal Oswal Securities, says: "GTB needed a good banker, and (B.D.) Narang, chairman of OBC, is the right man for the situation. For OBC, the amalgamation helps it expand operations in the south. The market has reacted positively to the developments."

 Click here for RBI notification on GTB merger with OBC