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Merger of icici & icici bk







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    Merger of icici & icici bk Merger of icici & icici bk Presentation Transcript

    • The merger: October 25, 2001 Agenda for the new millennium
    • C ontent
      • The merger
        • Transformation in the financial sector
        • ICICI group today - a virtual universal bank
        • Rationale for merger
        • Merger process
        • Conclusion
      • Summary of half yearly performance
        • ICICI
        • ICICI Bank
    • D efinition
      • Amalgamation as defined under Section 2(1B) of the Income-tax Act, 1961 (‘the Act’):
      • All assets & liabilities of the amalgamating company (transferor company) becomes the assets & liabilities of the amalgamated company (transferee company)
      • Consideration to shareholders of the transferor company by way of issue of shares in the transferee company
      • Issue of preference shares possible
      • But, where the transferor company is a listed company, stock exchanges could object
      • Shareholders holding not less than 3/4th in value of the shares of the transferor company should become shareholders of the transferee company
    • T ransformation in the financial sector
      • … are bringing about a fundamental change in financial sector business models
      G lobalization L iberalization Technology
    • C hange in business models
      • … as evidenced by the international precedents in universal banking
      Emergence of integrated universal banks Demanding and sophisticated customers Globalization Technological innovation Shareholder returns
    • U niversal Banks … many international players have realized the benefits of universal banking
    • T he benefits
      • Economies of scale through volumes in
        • Operating costs
        • Technology deployment
      • Economies of scope
        • Large product suite
          • Cross-selling potential
      • Optimization of Human capital
      • Optimization of Financial capital
      … all leading to the development of a more robust financial system
      • ICICI has already achieved it’s major benefits by entering into Universal Banking.
    • U niversal Banking
      • It is a Financial Supermarket which provide all types of financial services.
      • Retail Banking - Service to individual
      • Wholesale Banking - Corporate sector
      • Merchant Banking - Issue Market
      • Investment Banking - Advisory Service
      • Development Banking - Industrial sector
    • I CICI group today - a virtual universal bank Retail Financial Services Corporate Financial Services
      • Internet
      • B2B
      • Consumer Finance Portals
      • Web Trade
      • Venture Capital
      • Technology Platforms
      • Payment Gateway
      • Customer Relationship Management
      • Financial Vertical
      • Web Technologies
      … based on key building blocks present across the group ICICI ICICI Bank ICICI Securities ICICI Brokerage ICICI Venture ICICI Infotech ICICI Lombard ICICI ICICI Bank ICICI Capital ICICI Prudential ICICI Web Trade ICICI PFS ICICI Home
        • Strong brand identity
        • Technology enabled service
          • Largest network of ATMs in India
          • Highest number of Internet banking registrations
        • Large product suite
          • Largest auto financier
          • Largest incremental issuer of cards
            • Credit cards, debit cards and ATM cards
        • First banks in India to commence lead generation for Insurance products
      I CICI’s leadership
    • C urrent operating environment
      • Number of financial intermediaries
      • Increasing competitive pressures
      • Universal banking provides competitive advantages in the current environment through
        • Large product suite
        • Diversified resource
        • Economies of scale and scope
        • Optimization of Human and Financial capitals
      … providing a strong business logic for merger of ICICI and ICICI Bank
    • ICICI group’s strategy for success B uilding blocks
        • Human Capital
        • Speed Capital
        • Brand Identity
        • Organizational Values
        • Knowledge Capital
        • Technology Capital
      The building blocks supplemented by organizational changes have created the right combination for achieving leadership
    • S trong complementary organizations … having similar operating architecture, people and processes. This merged entity is consequently well-positioned to harness synergistic advantages and thereby provide benefits to both ICICI and ICICI Bank
      • ICICI
      • Large capital base
      • Diversified and de-risked assets
      • Strong brand
      • Well established corporate
      • relationships
      • ICICI Bank
      • Largest private sector bank
      • Strong retail franchise
      • Technology leader among banks
    • B enefits of merger
      • “ Forward leap” in the hierarchy of Indian banks
        • A discontinuous jump in size and scale
      • Achieve size and scale of operations
        • Leverage ICICI’s capital and client base to increase fee income
        • Higher profitability by leveraging on technology and low cost structure
      • Offer a complete product suite with immense cross-selling opportunities
        • ICICI’s presence in retail finance, insurance, investment banking and venture capital
      • Access to the ICICI group’s talent pool
    • B enefits of merger
      • Improved ability to further diversify asset portfolio and business revenues
      • Lower funding costs
        • Ability to accept/ offer checking accounts
        • Availability of float money due to active participation in the payments system
        • Diversified fund raising due to access to retail funds
      • Increased fee income opportunities
        • Ability to offer all banking products
      Merged entity would have key competitive advantages and would be a more efficient provider of capital Bank
    • Competitive advantages of the merged entity … after the merger, the combined entity would be the second-largest bank in India, with an asset base of over Rs. 1 trillion Large capital base Extensive customer relationships & strong brand franchise Complete product suite Technology -enabled distribution architecture Low operating costs Vast talent pool
    • M erger process - highlights
      • Valuation
        • Independently appointed investment bankers
          • ICICI - JM Morgan Stanley
          • ICICI Bank - DSP Merrill Lynch
        • Jointly appointed independent accountant to recommend the final exchange ratio
          • Deloitte, Haskins & Sells appointed
          • Recommended one share of ICICI Bank for two shares of ICICI, which was approved by the respective Boards
    • M erger process - highlights (contd.)
      • Transfer of ICICI’s shareholding in ICICI Bank to an SPV prior to the merger
        • Divestment in FY2003 by way of appropriate placement
      • Consolidation of retail operations
        • Merger of ICICI PFS and ICICI Capital Services with ICICI Bank
    • M erger process - regulatory issues
      • Merger effective on
        • March 31, 2002 or the date of RBI approval, whichever is later
        • Shareholders’ approval
        • High court approval
      • Accounting for the merger in line with international best practices
        • Purchase method, mandatory under US GAAP, to be adopted under Indian GAAP as well
    • I n conclusion
      • The merger will create a strong entity, which will redefine banking in the highly competitive era of globalization and liberalization
    • Financial performance of ICICI Institute and ICICI Bank.
    • I CICI: Summary performance (Indian GAAP) (Rs. in billion) Profit to equity holders increased by 16% in H1-FY02 (net of preference dividend payout)
    • I CICI: Summary ratios (Indian GAAP)
    • I CICI Bank: Income statement (US GAAP) (Rs. in million)
    • I CICI: Consolidated profits (Indian GAAP) 21% increase in Indian GAAP consolidated profits (Rs. in Billion)
    • I CICI: Consolidated profits (US GAAP) (Rs. in Billion)
    • I CICI Bank: Summary performance (Indian GAAP) (Rs. in million)
    • I CICI Bank: Summary ratios (Indian GAAP)
    • S afe Harbor
      • ICICI Limited and ICICI Bank expect to make available a copy of Amalgamation and an Information Statement to shareholders and investors.
      • Shareholders & investor are requested to read offer document carefully.
    • S afe Harbor
      • The statement of ICICI Ltd and ICICI bank which was a forward-looking statements and it is based on the current beliefs and expectations but actual result may differ from the forward-looking statements because it contain various risk and uncertainties are as follows.
      • The risk of failure to obtain government and other approvals of the merger as per planned.
      • The risk of failure of the High Courts of Mumbai and Gujarat to approve the Scheme of Amalgamation
      • The risk of business which may not be integrated as smooth as planned.
      • Merger of ICICI Ltd and ICICI bank making it more difficult to maintain relationships with clients, employees and suppliers.
      • The risk of new and changing regulation and unfavorable political support or other developments in Indian and international markets.
    • S afe Harbor
      • Merger of ICICI Ltd and ICICI bank making it more difficult to maintain relationships with clients, employees and suppliers.
      • The risk of new and changing regulation and unfavorable political support or other developments in Indian and international markets.
      • Apart from all above risk merger of ICICI Ltd and ICICI bank has achieved there goal as per the planned and today they are market leader in financial sector.
    • Thank You