ICICI LIMITED MERGE WITH ICICI BANK

ICICI LIMITED MERGE WITHICICI BANK

REVERSE MERGER Company with the track record of having a less profit earning Or loss making amalgamates Viable company to have benefits of economies of scale of production Marketing network Profit earning company survives and the loss making company extinguishes its existence. Sick companys survival becomes more importantHISTORYICICI Banking Corporation Ltd.Formed in: 1994Operations: Retail Banking/ Core Banking SolutionsForays: Life Insurance General Insurance BPOICICI LimitedFormed in: 1955Operations: Provide foreign currency Forays: Project finance Underwriting Venture Capital Mutual Funds

STRONG COMPLEMENTARY ORGANIZATIONSICICI LTDLarge capital baseDiversified and de-risked assetStrong brandWell established corporate relationship

ICICI BANKLargest private sector bankStrong retail financeTechnology leader among banks

REASONS proportion of loans made in the early and mid-1990s turning badLow-cost resources have been recurring themes Development Financial Institutions (DFIs) were cut off from concessional funding in the early 1990sGrowing competition from other financial intermediaries Harsher environment for corporatesCompetitive advantage of the merged entity

Large capital baseVast talent pool Technology enabled distribution architectureLow operating costExtensive customer relationships and strong brandComplete product suite

PROCESSTransfer of ICICIs share holding in ICICI BANK to an SPV prior to the mergerSwap ratio : 2 ICICI share for 1 ICICI Bank LTD.Divestment in FY 2003 by the way of appropriate placementConsolidation of Retail operationsMerger of ICICI PFS and ICICI capital services with ICICI BANK

Merger Effective On:MARCH 31, 2002 ( On the date of RBI approval)Share holders approvalHigh court approvalAccounting for the merger in line with international best practicesPurchase method mandatory under US GAAP be adopted under INDIAN GAAP as well

BENEFITSHaving similar operating architecture, people and processMerged entity consequently well positioned to harnessSynergistic advantages and their by provide benefits to both ICICI and ICICI BankForward leap in the hierarchy of Indian banksAchieve size and scale in operationICICIs capital and client base to increase fee incomeHigher profitability by leveraging on technology and low cost structurePresence in retail finance, insurance, investment banking and venture capital

CONCLUSIONThe merger created a strong entity Redefine banking in the highly competitive era of the globalization and liberalization

THANK YOU