RBI policy allows ING to hold 10% in merged entity: Uday Kotak

Following the acquisition of ING Vysya Bank by Kotak Mahindra Bank, the senior management today spoke to analysts via conference call. The management led by Uday Kotak, Executive Vice Chairman and MD clarified several queries raised by analysts regarding integration of the two banks and operational issues. Kotak also clarified that since ING will not hold any branches in India post the merger, the 5% restriction by RBI will not apply to them. An excerpt from the concall held on friday morning Stock Market Trading Tips

RBI regulations stipulate no foreign bank can hold more than 5%, will ING’s stake come down going forward?
Post the completion of merger, subject to regulators’ approval ING will have no foreign branches in India. The current RBI policy will then enable ING to own upto 10% in the combined entity.

ING Vysya’s cost to income ratio is on the higher side. How do you plan to improve that?
A higher short term cost to income ratio is a cost to grow the market. Our focus is to continue costs which add muscle and rationalise ones that add fat Financial Astrology Trading Tips

What are the challenges in fitment in your view?
The combined entity has about 30,000 employees. Of this, 3,000 employees are unionized workforce. We will do our best to make this work for all employees in the company. For us there is no concept of old and new. With all our mind and hearts we are looking forward to building this into a warm and strong entity.

There is a difference in savings account rate offered by both banks. Will the ING Vysysa customers get a higher rate straightaway?
All depositors will get the same rate. The rate of Kotak at the time of merger will be paid to all despositors of the combined entity Personal Numerology Trading Tips

When will the transaction be completed?
We will commence operations as one single entity from 1st April, 2015 if we receive all approvals on time

What will be the synergies from this merger?
Kotak is amongst the most significant lenders in tractor financing while ING Vysya has a significant network in Andhra Pradesh and Karnataka. We believe there is an opportunity for tractor financing for Kotak in these states. We will also have significant opportunity to expand Kotak product suite in the interntional market. We look forward to learn about high quality practices of ING Vysya in SME business, digital banking opportunity and international co-operation Intraday Trading Tips

Core purpose of the merger is to focus on growth and cost effectiveness over time. KMB has growth over 40% in the SA segment while ING Vysya is strong in the CA segment. We would strongly focus on building international relationship with ING which will enable us to serve Indian arm of international customers significantly better Nifty Trading Tips