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UTI Bank-GTB share swap ratio may remain unchanged

BS Banking Bureau

The share swap ratio of UTI Bank and Global Trust Bank merger is likely to remain unchanged at 2.25 (nine shares of UTI Bank to four shares of GTB) even though Deloitte, Haskins & Sells has recommended a marginal reduction in the ratio in favour of UTI Bank.

The accounting and management consultancy firm, appointed by UTI Bank for revaluation of the share swap ratio, held its final meeting on the issue on Thursday. The meeting was attended by chiefs of both the banks, UTI's PJ Nayak and GTB's Ramesh Gelli, besides GTB executive director Sridhar Subasri. The report, expected to be submitted Friday, will be forwarded to the Reserve Bank of India.

The original share swap ratio, cleared by the shareholders of the banks, was 2.25. SBI Caps, which brokered the deal, had suggested a ratio in the range of 2-2.5. This was arrived at after taking into consideration the financials of Global Trust Bank up to December 31.

"We have decided to keep the ratio unchanged despite the new valuation report, which says that there is a marginal erosion in the adjusted book value," sources pointed out.

UTI Bank had given a free hand to Deloitte, Haskins & Sells to decide on the methodology for arriving at the ratio. "It checked every account, looked into every asset and adopted a multi-dimensional approach to give a fair valuation report. The emphasis was on qualitative aspects and not only on the numbers alone," said a source.

SBI Caps had earlier taken into consideration the maintainable profits (2.17), book value (2.31), price earning multiple (2.22) and market price (1.86). Since the new valuer has been asked to keep the October-November GTB scrip movement out of the calculations, the market price valuation has come down slightly.

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