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A Kotak moment for Indian banking industry

A Kotak moment for Indian banking industry

Aparna Dutt Sharma, Chief Executive Officer, IBEF

Nov 24, 2014 3:02 PM

The recently announced Kotak Mahindra Bank Ltd's all-stock deal worth US$ 2.5 billion (around INR 15,475 crore) to acquire ING Vysya Bank Ltd has made the Indian lender the fourth largest private sector bank in India in terms of branch network. With a combined market capitalisation of INR 1 lakh crore (US$ 16.2 billion) and assets of US$ 32 billion, this is the biggest deal in India's banking sector. The merger is expected to double Kotak's branch network from 641 to 1,214. The acquisition holds strategic importance for Kotak as ING Vysya's 573 branches are mostly in the southern region whilst Kotak was predominantly strong in North India. The Kotak Mahindra-ING Vysya deal is the first in India since the 2008 economic meltdown involving two profit making banks.

The deal has rekindled possibilities of mergers and acquisitions in the Indian banking sector and can be expected to push other banks to consider acquisition opportunities within the smaller private sector bank space. In addition, market experts believe that this transaction may trigger the change in sentiment in the industry dealing with low credit growth and high NPAs.



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