The 55-year-old investment banker turned banker Uday Kotak has pounced at his first chance in the highly regulated banking space to acquire Ing Vysya Bank in an all-stock deal. The last merger the market saw was in 2010 when ICICI Bank acquired Bank of Rajasthan. In 2008, HDFC Bank had acquired Centurion Bank of Punjab.
The acquisition will straightaway give Kotak Mahindra Bank access to ING Vysya's huge network in south India. ING has 573 branches of which 64 per cent are in south India. Kotak has 641 branches, of which 46 per cent are in the west. The move will also help Kotak meet its target of 1,000 branches by 2016.
"We are getting businesses like SMEs, MNC clients, HNIs, forex and trade advisory where ING is very strong," said Uday Kotak, Vice Chairman and MD, Kotak Mahindra Bank, soon after sealing the deal here today. A beaming Uday Kotak said the objective of the merger was growth. "I firmly believe this merger will pave the way for a bigger and better financial services player with deep Indian roots and global standards of service," he said.
Many see the acquisition as a masterstroke by Kotak who has also managed to reduce his stake from 40 per cent to 34 per cent in all-stock deal. The RBI had asked Kotak to reduce his stake to 30 per cent by 2016, which now appears not so difficult.
The bank along with Yes Bank had got the banking licence in 2003 and has created a much bigger balance sheet among the mid-sized banks. Its total assets will now increase from Rs 1,34,401 crore to 1,98,983 crore, which is almost double that of its nearest rival Yes Bank.
ING was a minority stakeholder in the bank way back in 2007 and had sold its stake in 2010. However, Uday Kotak was always in touch with the ING promoters.
Uday Kotak, whose father was a cotton trader, has been building a financial supermarket kind of model with interests in mutual fund, insurance, private equity, commodity and so on. This merger with an European giant will provide further strengths especially in investment banking areas in Europe. The huge client base of ING's high net worth individuals can be used to cross sell opportunities in insurance and mutual fund.