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Assignment no-1

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Prepared by :

BhavyaSawhney

A1802009464

Semester-3

Section-A MBA-IB
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àompany Profile of IàIàI bank


c In 1955- The Industrial Credit and Investment Corporation of
India Limited (ICICI) incorporated at the initiative of the World
Bank, the Government of India and representatives of Indian
industry, with the objective of creating a development financial
institution for providing medium-term and long-term project
financing to Indian businesses. Mr.A.RamaswamiMudaliar
elected as the first Chairman of ICICI Limited. c
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ICICI Bank is India's second -largest bank with total assets of Rs. 3,634.00 billion (US$ 81
billion) at March 31, 2010 and profit after tax Rs. 40.25 billion (US$ 896 million) for the year
ended March 31, 2010. The Bank has a network of 2,035 branches and about 5,518 ATMs
in India and presence in 18 countries. ICICI Bank offers a wide range of banking products
and financial services to cor porate and retail customers through a variety of delivery
channels and through its specialised subsidiaries in the areas of investment banking, life and
non-life insurance, venture capital and asset management. The Bank currently has
subsidiaries in the Un ited Kingdom, Russia and Canada, branches in United States,
Singapore, Bahrain, Hong Kong, Sri Lanka, Qatar and Dubai International Finance Centre
and representative offices in United Arab Emirates, China, South Africa, Bangladesh,
Thailand, Malaysia and I ndonesia. Our UK subsidiary has established branches in Belgium
and Germany.
Company Profile of Bank Of Rajasthan

Bank of Rajasthan is a leading private sector Bank, having branches all over India with
prominent presence in Rajasthan having specialisedforex and Industrial finance branches.
The Bank operates in three business segments: treasury operations, banking operations and
others/residual. The services provided by the Bank includes commercial banking, merchant
banking, auxiliary services , consumer banking, deposit and money placement services,
trusts and custodial services, international banking, private sector banking and depository.
The other products provided by the Bank includes anywhere banking, Internet banking,
mobile banking, life insurance, general insurance, mutual funds, depository services, credit
cards, international debit cards, foreign remittances, Western Union money transfer, stamp
franking, online shopping and lockers facility. Bank Of Rajasthan Ltd was incorporated on
May 8, 1943 at at Udaipur, the city of lakes in Rajasthan. The Mansingka brothers of
Bhilwara established the Bank as a joint stock bank. The bank became a scheduled bank in
1948 and acted as a banker to the government of Rajasthan for more than 14 years. In the
year 1955, the Bank was given license by the Reserve Bank of India. In August 1960, the
Bank opened their first mobile branch in Jaipur. In the year 1973, they received license to
deal in foreign exchange from the RBI. In addition, they opened their 1 00th branch at
Barmer. In the year 1980, they opened their 200th branch in Jodhpur. In January 1983, they
established the MewarAnchlikGramin Bank in Udaipur, Rajasthan. In the year 1993, the
Bank received authority to deal as Class -I Merchant Banker. In ad dition, they started the
currency chest of the Bank. In the year 1997, they opened their 300th branch in Cochin.
They started their first ATM services in the series of quality services to their customers at C -
Scheme Jaipur branch from July 1, 1998. In the year 2000, the Bank made a tie up with
Infosys Technologies for revamping their infotech infrastructure that will allow the bank to
fully computerized. In the year 2002, the Bank introduced a new scheme called 'gaddi -
bangla scheme' to provide loan to buy h ouse and car. They implemented a IT infrastructure
called NetServices Software developed by Novell Software Ltd. The Bank made a tie -up with
Corporation Bank for sharing the teller machine networks. During the year, the Bank signed
anMoU with Bajaj Allianz General Insurance Company to act as their exclusive corporate
agent in Rajasthan. They also signed anMoU with Birla Sun Life Insurance for distributing
Insurance Products. During the year 2002 -03, the Bank opened a fully computerized,
Treasury Branch at Mumbai, connected on line with other Any where Banking branches.
They opened seven new fully computerized online branches at SubhashMarg, Jaipur; Thane
(West); Silvasa(UT); Bhavnagar; Malegaon; Jhotwara and Jaipur. In addition, they opened 4
new Extension Counters and upgraded 15 Extension Counters into full fledged branches.
During the year, UTI entered into ATM sharing venture by joining hands with the bank. In
addition, the Bank signed anMoU with Bank of Baroda to issue co -branded international Visa
Electron DebitCard. During the year 2003 -04, the Bank opened 16 new branches, out of
which 12 were located out side Rajasthan. They also opened 9 new Extension Counters and
upgraded 2 Extension Counters into full -fledged branches. In addition, they installed 27 new
ATMs during the year. As per the scheme of merger, all the assets and liability of the Bank's
wholly owned subsidiary company namely Rajasthan Bank Financial Services Ltd merged
with the Bank with effect from April 1, 2003. In November 2003, the Bank launched
International Debit Card with tie -up arrangement with the BOB Cards Ltd. During the year
2004-05, the Bank launched a new retail -banking product under the name Raj Bank
LaghuUdhyami Credit Card (RBLUCC) that enables hassle free credit limit uptoRs 10.00
lakh to entrepreneurs of small -scale industries, small business entities, professionals & self -
employed persons etc. The Bank also provided Depository Service at 141 centres through
direct connectivity. During the year, the Bank opened 17 branches 1 1 extension counters
and 7 Offsite ATMs. The new branches include centers like Jabalpur, Sendwa, Mandsaur
and Burhanpur in Madhya Pradesh, Raipur in Chattisgarh, Hissar, AmbalaCantt. and
Yamuna Nagar in Haryana, Patiala in Punjab, Amravati, Parbhani, Malad &Vashi in
Mahrashtra, Sarat Bose Road in Kolkata, Gopalpura circle in Jaipur & Service Branch, Kota
in Rajasthan and PaschimVihar in Delhi. In June 2004, the Bank joined Real Time Gross
Settlement (RTGS) system of Reserve Bank of India, which eliminated se ttlement risks and
has reduced transaction cost and facilitated better funds management by the Bank. In
September 2004, they introduced a New Banking Solution (BancMate) for the branches
other than on Core Banking. With the implementation of BancMate, the data of entire Bank
will be available at central storage at Data Center, which will enable the availability of
delivery channels to all the branches and make Anywhere Banking facility available at all
branches. During the year 2005 -06, the Bank opened 14 b ranches at Ranchi (Jharkhand),
Jammu (J&K), Patna (Bihar), Simla (HP), Guwahati (Assam), Dehradun (Uttaranchal), Akola
and Yawatmal in Maharashtra, Bhatinda and Kapurthala in Punjab, Meerut in UP and
Guntur, Adilabad and Vishakhapatanam in Andhra Pradesh. In addition, they opened 4
extension counters, 2 Offsite ATMs and upgraded 16 Extension Counters into full -fledged
branches. During the year, the Bank launched Internet banking services. They terminated
the tie up arrangements with Bajaj Allianze General I nsurance Company and Birla Sunlife
Insurance Company. In addition, they made new arrangements with United India Insurance
Company Ltd and Life Insurance Corporation of India for marketing their non -life and life
insurance products respectively. In March 20 06, the Bank entered into a rupee drafts
drawing arrangement with Wall Street Exchange Centre LLC, Dubai that is an established
exchange company in UAE. During the year 2006 -07, the company opened 9 new branches
at Muktsar&Khanna in Punjab, Bangalore in Ka rnataka; Jodhpur in Rajasthan; Panjim in
Goa; Hargobind Enclave &Kalkaji in New Delhi; Warangal &Vijaiwada in Andhra Pradesh. In
addition, they upgraded 30 Extension Counters into full -fledged branches and opened 4
Offsite ATMs & 12 Onsite ATMs. In August 2006, they commenced foreign exchange
business at their Tirupur branch. During the year 2007 -08, the Bank opened new branches
at Dibrugarh, Tinsukia&Jorhat (Assam), Vapi&Kadi (Gujrat), Gurgaon &Manesar (Haryana),
Baddi (Himachal Pradesh), BrahmaniKamleshwa r, Pulgaon, Jalgaon, Bhiwandi, Kandivali,
Kolhapur & Nasik (Maharasthra), Moga (Punjab), Tiruchirapally&T.Nagar Chennai
(Tamilnadu) and Siliguri (West Bengal). They upgraded 2 Extension Counters into full -
fledged branches Rambagh Palace Hotel, Jaipur and R SRTC Dungarpur and opened 12
offsite ATMs & 8 Onsite ATMs. During the year 2008 -09, the company implemented the new
integrated treasury software 'KASTLE' from 3i Infotech at Bank's Treasury branch, Mumbai.
They came out with Tier II Bond issue (Series VI) aggregating to Rs 43.80 crore allotted on
January 5, 2009. In September 2008, the Bank signed anMoU with ICRA Ltd under which,
ICRA will assign ratings to Bank's loans and other exposures under the standardised
approach of RBI's new capital adequacy framew ork. The Bank proposed to open new
branches and 28 offsite ATMs at different locations/centres. They proposed to enter the
rupee draft drawing arrangement with Al Muzaini Exchange Company, Kuwait and
HabibQutar International Ltd, Doha. As on March 31, 2009 , the Bank had 463 branches,
which includes 6 service branches, 29 offsite ATMs and 82 onsite ATMs covering 22 States
and 2 Union Territories across the country.

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ICICI banks sole aim is to increase its CASA deposits. However, contradicting to the
situation ICICI bank added CASA deposit for the year ended March 2010 aggregating over
Rs 21000 crore. On the other hand BoR¶s CASA deposits stand at Rs 4163 at the end of
past fiscal. BoR¶s base is too low to bring about any dramatic improvement in ICICI bank¶s
low cost deposit base.
What BOR offers is it franchise constituting a network of 463 branches out of which 271 are
in urban areas. However, if productivity of branches is taken into consideration BoR is far
behind ICICI bank. A lso BoR ability to generate income from its assets is lower than ICICI
bank. While BoR clocked a return on average assets (RoAA) at 0.7%, ICICI bank reported a
RoAA at 1%. Considering this the proposed merger will be RoAA -dilutive for ICICI bank.
However there is one thing where BoR is better than ICICI bank is the quality of books. At
the end of December 2009 quarter, net non -performing assets (NPAs) formed 1.05% of
advances of BoR. This is much better than ICICI bank at the end of FY10. But then what has
to be taken into consideration is that ICICI bank¶s asset size is way above when compared to
BoR.
Even in past mergers have taken place like the HDFC bank acquiring Centurion Bank of
Punjab (CBoP). This merger has led a lag effect on HDFC asset quality sin ce CBoP asset
quality was fairly poor. This may not happen with ICICI bank and BoR merger since BoR
asset quality is better.
Thus the overall merger with BoR is an expensive one for ICICI bank. According to the
sources the share swap of BoR is valued at R s 6.6 crore per branch which clearly indicates
ICICI bank had no option but to pay a premium.
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ICICI Bank further stated that it has entered into an agreement with certain shareholders of
Bank of Rajasthan agreeing to effect the amalgamation of Bank of Rajasthan with ICICI
Bank with a share exchange ratio of 25 shares of ICICI Bank for 118 shares of Bank of
Rajasthan.

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ÈThis is based on an internal analysis of the strategic value of the proposed amalgamation,
average market capitalisation per branch of old private sector banks and relevant precedent
transactions. The proposed amalgamation would substantially enhance ICICI Bank's branch
network, already the largest among Indian private sector banks, and especially strengthen its
presence in northern and western India.´

ÈIt would combine Bank of Rajasthan's branch franchise with ICICI Bank's strong capital
base. The valuation implied by the share exchange ratio as mentioned is in line with the
market capitalisation per branch of old private s ector banks in India. It also compares
favourably with relevant precedent transactions. The final determination of the share
exchange ratio is subject to due diligence, independent valuation and approvals,´ ICICI Bank
added.

Bank of Rajasthan has informed stock exchanges that Èthe board met on Tuesday, where in -
principle approval by majority was given for an amalgamation of the bank (transferor bank)
with ICICI Bank (transferee bank) subject to receipt of valuation report from an independent
valuer and othe r required approvals/permissions.´
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