The document discusses the merger between Global Trust Bank and Oriental Bank of Commerce from several perspectives: 1. An analysis of the banks' financial performance and profitability ratios before and after the merger found that the merger did not result in significant improvements and burdened the acquiring bank. 2. The terms of the merger provided no compensation for Global Trust Bank shareholders. Some investors may have had insider information and sold their shares before details of the troubled financial condition became public. 3. Employee retention strategies implemented included salary loans, education financing, and developing a supportive work environment, though most employees felt no formal retention strategies were in place. 4. HR professionals played a key role and culture integration was important, but

1. Global trust bank and
oriental bank of commerce
Book report
SY-BFM
SALONI (19)-CULTURAL CHANGES
ANUSHA (20) - OPERATIONAL SYNERGIES.
AISHWARYA (21) - ORGANISATIONAL STRUCTURE.
YASH (35) - FINANCIAL POSITION AND PROFITABILITY PRE AND POST
MERGER.
SOWJANYA (50) - EMPLOYEE RETENTION AND TRAINING
STRATERGIES.
KOMAL (53) - IMPACT ON HR.
RASHESH (64) -CONCLUSION.

2. Index
Financial position and profitably 3
Employee retention and training 6
Impact on HR 11
Organizational structure 14
Operational synergies 18
Conclusion 22

3. Financial Position & Profitability
The Pre-merger and the Post-merger financial performance of acquiring bank
(Oriental Bank of Commerce) in terms of above ratios. The Premerger financial
performance appraisal of the acquiring bank (Oriental Bank of Commerce) on the
basis of ratio analysis is done. The operating profit margin for the year 2000 was
73.3314 percent. The net profit margin was 7.35447 percent with RONW & ROCE
at 19.50574 and 1.13531 percent. The operating profit margin decreased at 71.8403
percent in 2001 but the net profit margin increased at 11.33495 percent. The
RONW & ROCE reduced at 13.101 and 0.74943 percent. The operating profit
margin remains unchanged with 71.17057 percent and the net profit margin had
slightly decline at 10.54277 percent. However, the RONW & ROCE shows
improvement in the year 2002 at 19.79033 and 0.99355 percent. But in the
financial year before the merger, the operating profit margin dropped at 69.33823
percent as well as the net profit margin, RONW & ROCE escalate in the year 2003
at 13.86928, 21.66317 and 1.34445 percent. The Post-merger performance

4. appraisal of acquiring bank (Oriental Bank of Commerce) for the very next year
declined in terms of operating profit margin at 66.51977 percent but the net profit
margin mount at 20.32727 percent. The RONW & ROCE remain unchanged at
21.82349 and 1.34284 percent in the year 2005. The operating profit margin has
improved in the year 2006 with 71.03755 percent however the net profit margin,
RONW & ROCE reduced at 13.52684, 10.77516 percent and 0.94534 percent. The
operating profit margin has increased in the year 2007 at 75.96332 percent but the
other ratios like net profit margin & RONW remain unchanged except the return
on capital employed show declined with 11.24532, 10.37103 and 0.78555 percent.
The net profit margin, RONW & ROCE reduced in the year 2008 at 5.16454,
6.11541 & 0.38941 percent but the operating profit show improved performance
and moved up to 84.8385 percent. The net profit margin, RONW &ROCE again
shows positive movement in the yearpercent. The net profit margin was 7.35447
percent with RONW & ROCE at 19.50574 and 1.13531 percent. The operating
profit margin decreased at 71.8403 percent in 2001 but the net profit margin
increased at 11.33495 percent. The RONW & ROCE reduced at 13.101 and
0.74943 percent. The operating profit margin remains unchanged with 71.17057
percent and the net profit margin had slightly decline at 10.54277 percent.
However, the RONW & ROCE shows improvement in the year 2002 at 19.79033
and 0.99355 percent. But in the financial year before the merger, the operating
profit margin dropped at 69.33823 percent as well as the net profit margin, RONW
& ROCE escalate in the year 2003 at 13.86928, 21.66317 and 1.34445 percent.
The Post-merger performance appraisal of acquiring bank (Oriental Bank of
Commerce) for the very next year declined in terms of operating profit margin at
66.51977 percent but the net profit margin mount at 20.32727 percent. The RONW
& ROCE remain unchanged at 21.82349 and 1.34284 percent in the year 2005.
The operating profit margin has improved in the year 2006 with 71.03755 percent
however the net profit margin, RONW & ROCE reduced at 13.52684, 10.77516
percent and 0.94534 percent. The operating profit margin has increased in the year
2007 at 75.96332 percent but the other ratios like net profit margin & RONW
remain unchanged except the return on capital employed show declined with
11.24532, 10.37103 and 0.78555 percent. The net profit margin, RONW & ROCE
reduced in the year 2008 at 5.16454, 6.11541 & 0.38941 percent but the operating
profit show improved performance and moved up to 84.8385 percent. The net
profit margin, RONW &ROCE again shows positive movement in the year 2009
after declined in the previous year at 10.22326, 12.2297 & 0.80422 percent and the
only operating profit margin slightly decline in the year 2009 at 78.45936 percent.

5. The operating profit margins again fell at 75.60757 percent and the net profit
margin, RONW & ROCE rose in the year 2010 at 11.06236, 13.77381 & 0.82563
percent. The ratio analyses for the year 2011 had declined in terms of operating
profit margin, net profit margin, RONW & ROCE moved at 74.36245, 8.71017,
9.48775 & 0.65256 percent.
The terms of the OBC-GTB amalgamation are such that the existing shareholders
of GTB will not get anything as a result of the merger - referred to in market
parlance as a swap. Meanwhile, there was unusual trading activity in GTB shares
in the stock market after the announcement. This was certainly unusual for an
institution that was on its last legs. Meanwhile, reports from the market indicated
that large entities including promoters, foreign institutional investors and Overseas
Corporate Bodies and Non-Resident Indians, had offloaded their holdings in the
GTB scrip in the weeks before the moratorium was declared by the RBI.
According to some reports, nearly 16 per cent of GTB shares were offloaded by
these investors between June 14 and July 24,2004. As a result, the holdings of
smaller investors increased from 44 per cent to 51 per cent by the time the bank
was declared dead. In fact, there are some reports that these holdings could account
for almost 60 per cent of the shares.
SEBI announced that it is examining trade data during the last six months to see
whether the activity in the market is indicative of insider trading. However,
speculation is rife because it is now known that OBC gave the RBI its letter of
intent in mid-July There were reports that the investor was agreeable to investing
Rs.1,500crores in GTB. Obviously, those who were in the inside track knew where

6. the bank was headed and quickly dumped their stock. But as it happens always in
the stock market, those outside the loop were the losers.
The Time and saving Deposits i.e the total deposits has declined marginally in the
post merger period. At the same time the Credit/Deposit ratio has increased in the
post merger period depicting leeser funds have been raised in the form of time and
saving deposits, but they have served better the needs of the customers by
advancing more loans from existing funds. The ratio of cash and bank balance to
toal assets have made a mild improvement, but the ratio of advances to total assests
has increased. It implies the presence of low-cost funds in the form of time and
savings deposits in theportfolio of Oriental Bank of Commerce, enabling it to
advace more loans to the customers, which in turn improved their credit creation
capacity. Both the acquiring banks (Oriental Bank of Commerce) havenot created
positive difference after the merger in terms of profitability.
The Study of profitability and financial position attempts to determine whether
horizontal bank mergers result in efficiency improvements relative to other firms.
It reflects that merger of sick banks with the healthy banks for the purpose of
rehabilitation do not bring any significant improvement, instead they burden the
acquiring banks by way of creating mounting non-performance assets, negative
networth and negative profitability as is evident in the merger of Oriental Bank of
Commerce with Global Trust Bank
Refernces:
Rhoades, S.A. (1993), ”The Efficiency Effects of Horizontal Bank
Mergers”
www.global journals.com
www.indianresearchjournals.com

7. Employee retention and training.
Successful organizations realize employee retention and talent management is
integral to sustaining their leadership and growth in the marketplace. Attracting,
hiring, and retaining high-caliber employees in today’s labor market challenges all
organizations to manage talent at all levels. Our employee retention programs
provide strategies and suggestions on ways to turn an average organization into a
highly productive, low-turnover environment where managers can focus on
productivity — not recruiting and replacing an endless stream of workers.
Some of the specific employee retention steps taken by global trust bank and
oriental bank of commerce are:-
 Salary Advance Loan
This is a Short Term Loan Product that facilitates employees to meet short term
needs such as School fees, rent and other Personal Emergencies.
 NGO’S & Embassies
This is an account tailor-made for NGOs, Non-profit firms and Embassies for
purposes of collections of donations and remittances and any funds they may have
available.
It includes options of opening the VISA Collections Account for the Embassies
and the Operational Account for both Embassies and NGOs.
 Education Based Financing
Our focus on education is both a strength and advantage to us because of the focus
and value we attach to it.
Target market:
This is specially designed for nursery, primary, secondary schools, universities and
other tertiary institutions both public and private in nature. It also involves all
stakeholders including students and employees.
Only requirement -Must open an account with Global Trust Bank.
Some of the main strategies for employee retention in general were also followed.

8. 1. Working environment
The primary employee retention strategies have to do with creating and
maintaining a workplace that attracts, retains and nourishes good people. This
covers a host of issues, ranging from developing a corporate mission, culture and
value system to insisting on a safe working environment and creating clear, logical
and consistent operating policies and procedures.
 Clarify your mission.
 Create a values statement.
 Communicate positive feelings.
 Stay focused on the customer.
 Be fair and honest.
 Cultivate a feeling of family.
2. Employee relationship strategies
Employee relationship strategies have to do with how you treat your people and
how they treat each other. Developing effective employee relationship strategies
begins with three basic steps:
 Give your managers and supervisors plenty of relationship training.
 Ask employees why they work for you.
 Once you have the information about why people work for you, ask: "What
can we do to make things even better around here.
3. Employee support strategies
Employee support strategies involve giving people the tools and equipment to get
the job done. When people feel they have what they need to perform, job
satisfaction increases dramatically. All employee support strategies stem from
three basic principles:
 People want to excel.
 People need adequate resources to get the job done.
 People need moral and mental support from you and your managers.
It was noticed that the majority of the respondents (60.2%) had mentioned that
their organizations have not formulated any retention strategy. Interestingly, 21.4%
of the respondents mentioned "do not know" while 18.4% said that their

9. organizations have a retention strategy. In short, the majority of the public sector
organizations do not make sufficient effort to retain their employees which shows
that the human resources management role in the public sector organizations is still
very weak.
Data analysis shows that 37% did not change their job/organization in their entire
career. However, about 58% had changed their job/organization at least once
during their career. The percentage of the respondents who changed their
organizations at least once represent 28% while the employees who changed their
job/company more than once is illustrated in Table 2. Interestingly, some
employees changed their jobs/organizations more than five times although they
represent 5% of the sample only. Global Journal of Management and Business
Research Volume XII Issue I Version I86Employee Turnover and Retention
Strategies: An Empirical Study of Public Sector Organization.Table 2 :
Respondents' turnover frequency
Turnover Frequency N %
None 209 37
1 time 158 28
2 times 82 14
3 times 61 11
5 times 29 5
More than 5 times 22 4 .The relationship between turnover and the above
mentioned demographic variables will be reported in the following sections by
using correlations and one-way ANOVA. The analysis was done on the basis of
the above indicated factors.
1). Age and turnover:The relationship between the age and the overall turnover rate
was analyzed by using Pearson Chi-Square Test. The correlation is significant
(DF=200, P=.01). ANOVA shows that there is a significant difference on the
overall turnover rate on the basis of age (F=2.70, P=.05).
2). Education and turnover:ANOVA shows that there significant differences on
factor “a” and factor “c” on the basis of the educational levels. In factor a (F=4.32,

10. P=0.01) and in factor c (F=2.27, P=.05). However, no significant difference on the
overall turnover rate on the basis of educational levels.
3). Sectors of activity and turnover: In the public sector, there was no significant
difference on the attitudes towards the indicated factors on the basis of the public
sectors' types sector (telecom, power, electronic media, banking and stock market)
ANOVA shows no significant differences on the basis of the types of activities in
various sectors and overall turnover. However, in the telecom sector ANOVA
shows a significant difference on the basis of the types of activities and the overall
turnover rate (F=4.90, P=.05).
4). Gender, attitudes and turnover: ANOVA shows no significant difference on the
overall turnover rate on the basis of gender. However, there are significant
differences between male and female respondents in the following factors: Factor b
(F=8.05, P=.01). Factor d (F=11.87, P=.001). Factor e (F=7.83, P= . 01).
5) Position, attitudes and turnover: No significant difference on the overall
turnover on the basis of the position in the organization. In addition, no significant
differences on the indicated factors on the basis of position, too.
6). Length of service and turnover: ANOVA shows that there are significant
differences on the basis of the periods that the employees spend in the organization
and two of the indicated factors as follows: Factor a (F=3.35, P=.01). Factor e
(F=2.93, P=.01)
Reference and bibliography-www.
orientalbankofcommerce.com
www.latestbankingset.com
www.employeesassciation.com
www.dailysamachar.com

11. IMPACT ON HR-HR
professionals play a critical role in the success or failure of mergers and
acquisitions.Researchers in some articles also raise issues related to human
resource management. Bryson, (2003) reviewed the literature around managing
HRM risk in a merger. He found that poor merger results are often attributed to
HRM and organizational problems, and that several factors related to maintaining
workforce stability are identified as important in managing HRM risk. Schraeder
and Self (2003) found that organizational culture is one factor as a potential
catalyst to M&A success.Chew and Sharma (2005) examined the effectiveness of
human resource management (HRM) and organizational culture on financial
performance of Singapore-based companies involved in mergers and acquisition
activities. They used the method of content analysis to collect information on
cultural values and HRM effectiveness, using Kabanoff's content analysis. Culture
profiles were then assigned to organizations in the sample following the results
from cluster analysis.
GLOBAL TRUST BANK & ORIENTAL BANK OF COMMERCE:
For Oriental Bank of Commerce there was an apparent synergy post merger as
theweakness of Global Trust Bank had been bad assets and the strength of OBC
lay in recovery. In addition, GTB being a south-based bank would give OBC the
much-needed edge in the region apart from tax relief because of the merger. GTB
had no choice as the merger was forced on it, dated 14thfollowing its
bankruptcy.August 2004, by an RBI ruling, OBC gained from the 104 branches
and 276 ATMs of GTB, a workforce of 1400 employees and one million
customers. Both banks also had a common IT platform.Post-merger with Global
Trust Bank (GTB), the employees of Oriental Bank of Commerce (OBC) were
protesting on account of salary disparities. Even though the terms and conditions of
the merger permit GTB employees to draw higher salaries for a period of three
years, the OBC staff had called for a strike. The OBC employees felt that there
should be no salary disparities and the matter must be referred to the officers'
association, according to banking industry sources.Even though GTB was
reporting losses since the lastcouple of years, the bank habeen paying sizeable
chunk of salaries from the middle-level onwards. Interestingly, the salaries of top
officials at OBC are equivalent to that of the middle level at GTB.The `payment

12. and provisions for employees' in the annual report of GTB, for instance, indicates
that it has paid about Rs 42 crore towards its 1,400 employees, which roughly
translates into Rs 3 lakh per person. OBC, on the other hand, has incurred a
`provision for employees' of Rs 350 crore (excluding VRS of its employees which
is pegged at Rs 16.36 crore) towards its 13,500 employees, which translates into
Rs 2.59 lakh per employee.Also, GTB employees get a sizeable chunk of their
salaries by way of perquisites that do not get reflected under the head `provision
for employees'.However, OBC is scrutinising these resignations to find out if any
of theseemployees have any connection with the fraudulent practices in the Global
Trust Bank.
"OBC have not accepted the resignations of some 200 employees of Global Trust
Bank, who have offered to quit. OBC will scrutinise all these cases carefully to
verify whether they have any role in the frauds that were committed in GTB. The
resignations of those who are found to have been responsible for frauds, will not be
accepted," HomaiDaruwalla, executive director, Oriental Bank of Commerce, said
in Ahmedabad.Meanwhile, OBC has initiated the process of recovering dues from
landlords of the erstwhile GTB, which was merged into OBC in August last year.
Interest free deposits worth crores of rupees were given to owners of premises in
which GTB branches functioned.Sources said that interest free deposits worth
Rs60 crore were given by the GTBmanagement to these landlords.
"According to RBI guidelines, the landlords cannot take more than six months' rent
of premises in which banks function. We have asked them to refund the remaining
amount to the bank," said a source close to OBC.Commenting on the resignations
of employees, OBC ED Daruwalla said that GTB employees enjoyed a far higher
salary than OBC employees, to the extent that a fewemployees of GTB enjoyed
higher salaries than the OBC chairman and managing director or the executive
director.
"OBC has also not renewed the contract of SudhakarGande and he now stands
suspended," said Daruwalla.This is the impact on HR because of the merger of the
banks.

13. IMPACT ON HR- HR professionals play a critical role in the success or failure of
mergers and acquisitions. Researchers in some articles also raise issues related to
human resource management.Bryson, (2003) reviewed the literature around
managing HRM risk in a merger. He found that poor merger results are often
attributed to HRM and organizational problems, and that several factors related to
maintaining workforce stability are identified as important in managing HRM risk.
Schraeder and Self (2003) found that organizational culture is one factor as a
potential catalyst to M&A success. Chew and Sharma (2005) examined the
effectiveness of human resource management (HRM) and organizational culture on
financial performance of Singapore-based companies involved in mergers and
acquisition activities. They used the method of content analysis to collect
information on cultural values and HRM effectiveness, using Kabanoff's content
analysis. Culture profiles were then assigned to organizations in the sample
following the results from cluster analysis.
GLOBAL TRUST BANK & ORIENTAL BANK OF COMMERCE:
For Oriental Bank of Commerce there was an apparent synergy post merger as the
weakness of Global Trust Bank had been bad assets and the strength of OBC lay in
recovery. In addition, GTB being a south-based bank would give OBC the much-needed
edge in the region apart from tax relief because of the merger. GTB had no
choice as the merger was forced on it, dated 14th August 2004, by an RBI ruling,
following its bankruptcy. OBC gained from the 104 branches and 276 ATMs of
GTB, a workforce of 1400 employees and one million customers. Both banks also
had a common IT platform.
Post-merger with Global Trust Bank (GTB), the employees of Oriental Bank of
Commerce (OBC) were protesting on account of salary disparities. Even though
the terms and conditions of the merger permit GTB employees to draw higher
salaries for a period of three years, the OBC staff had called for a strike. The OBC
employees felt that there should be no salary disparities and the matter must be
referred to the officers' association, according to banking industry sources. Even
though GTB was reporting losses since the last couple of years, the bank has been
paying sizeable chunk of salaries from the middle-level onwards. Interestingly, the
salaries of top officials at OBC are equivalent to that of the middle level at GTB.
The `payment and provisions for employees' in the annual report of GTB, for
instance, indicates that it has paid about Rs 42 crore towards its 1,400 employees,

14. which roughly translates into Rs 3 lakh per person. OBC, on the other hand, has
incurred a `provision for employees' of Rs 350 crore(excluding VRS of its
employee which is pegged at Rs 16.36 crore) towards its 13,500 employees, which
translates into Rs 2.59 lakh per employee. Also, GTB employees get a sizeable
chunk of their salaries by way of perquisites that do not get reflected under the
head `provision for employees'. However, OBC is scrutinising these resignations to
find out if any of these employees have any connection with the fraudulent
practices in the Global Trust Bank. "OBC have not accepted the resignations of
some 200 employees of Global Trust Bank, who have offered to quit. OBC will
scrutinise all these cases carefully to verify whether they have any role in the
frauds that were committed in GTB. The resignations of those who are found to
have been responsible for frauds, will not be accepted," HomaiDaruwalla,
executive director, Oriental Bank of Commerce, said in Ahmedabad. Meanwhile,
OBC has initiated the process of recovering dues from landlords of the erstwhile
GTB, which was merged into OBC in August last year. Interest free deposits worth
crores of rupees were given to owners of premises in which GTB branches
functioned. Sources said that interest free deposits worth Rs60 crore were given by
the GTB management to these landlords."According to RBI guidelines, the
landlords cannot take more than six months' rent of premises in which banks
function. We have asked them to refund the remaining amount to the bank," said a
source close to OBC.Commenting on the resignations of employees, OBC ED
Daruwalla said that GTB employees enjoyed a far higher salary than OBC
employees, to the extent that a few employees of GTB enjoyed higher salaries than
the OBC chairman and managing director or the executive director. "OBC has also
not renewed the contract of SudhakarGande and he now stands suspended," said
Daruwalla. This is the impact on HR because of the merger of the banks.
REFERENCE-
1. The Banker, July 2007
2. www.banknetindia.com
3. Reserve Bank of India: Publications Various Issues.

15. ORGANISATION’S STRUCTURAL CHANGES-PRE
MERGER-On
14 August 2004, Global Trust Bank Limited (GTB) was amalgamated into
OBC. GTB was a leading private sector bank in India that was associated with
various financial discrepancies leading to a moratorium being imposed by RBI
shortly before being merged into OBC.
OBC initially had 841 branches, comprising 247 rural branches, 271 semi-urban
branches, 220 urban branches and 103 Metropolitan branches.
The genesis of the GTB collapse lies in now ousted promoter Ramesh Gelli's
involvement in the Ketan Parekh securities scam of 2001, when he gave huge
unsecured loans to the stock broker and group companies of Zee Telefilms.
former GTB Chairman Ramesh Gelli is credited with creating absolutely top-of-the-
line infrastructure and hr pool-and you have the makings of a winner.
On its part, GTB did all it could to please RBI, including the appointment of
SudhakarGande as MD in March 2002. Gande's mandate was clear-recovery of bad
loans, capital infusion and increasing the provisioning against potential NPAs.
Price Waterhouse partner S Gopalakrishnan, currently under arrest for his alleged
role in fudging the books of Satyam Computer Services, alongwith two others has
been found guilty of 'professional misconduct' in auditing the books of Global
Trust bank (GTB), accounting regulator Institute of Chartered Accountants of India
(ICAI) said here.Apart from MrGopalakrishnan, the two other auditors found
guilty by the ICAI include Price Waterhouse partner P Ramakrishna and Manish
Agarwal, an employee of audit firm Lovelock & Lewes SudhakarGande,
Managing Director, Global Trust Bank.
POST MERGER CHANGES-During
the merger B.D. Narang was appointed as the chairman of Oriental Bank
Of Commerce.
Oriental Bank of Commerce will retrain the staff of Global Trust Bank to enable
them to carry out lending activities at branch level and attain three times more
business from the acquired unit.

16. Of the 1,300 staff of GTB, 160 have quit after the merger despite OBC offering job
protection and retaining their high pay package.
As part of its strategy to benefit from the synergy of the merger, OBC is
rationalising the tech-savvy private bank's branches and staff, he said.
Before merger, GTB branches were not empowered to take decisions on advancing
loans to customers. The decision-making process was centralised.
After taking over GTB, OBC now wants to relegate the powers enjoyed by its
branches to the GTB branches as well.
Meanwhile, Oriental Bank has sent personnel from its headquarters here to the
GTB branches, where employees had resigned, to ensure that business does not
suffer. “We have accepted the resignation of 160 GTB staff," Narang said.
OBC may appoint this week a global consultant to restructure and integrate the
troubled GTB with it. The internal assessment, carried out by the bank on GTB,
was delayed due to some valuation problems and a report was understood to have
been submitted last week.
It was pointed that the Rs 68,000-crore post-merger balance sheet of his bank, Rs
10,000-crore stronger than its pre-nuptial avatar. And that's not taking into account
the foothold that the former GTB gives him in the prosperous South, something
that OBC had been trying unsuccessfully to do for many years now; the status of a
national bank that comes along with it is the icing on the cake.
OBC already had a substantial presence in the West; and GTB provided it with a
ready-made plugged-and-playing infrastructure in the South. In one stroke, OBC
also doubled its presence in the two regions and gained some much-needed
technological muscle:
GTB's 275 ATMs multiplied its existing strength of 72 by a factor of almost five,
making it the third largest ATM operator among PSU banks. Narang
simultaneously expanded his roster of depositors by nearly a million well-heeled
customers and added 103 branches to his existing network of 1,013.
For now, he has completed his immediate task of calming GTB's 8.34 lakh retail
investors and has revised his growth target for the current fiscal. Before the merger
proposal, OBC had targeted a 25 per cent growth in 2004-05. This has been raised
to 30 per cent. The goal: A balance sheet size of Rs 80,000 crore.OBC may appoint
this week a global consultant to restructure and integrate the troubled GTB with it.

17. The internal assessment, carried out by the bank on GTB, was delayed due to some
valuation problems and a report was understood to have been submitted last week.
It was pointed that the Rs 68,000-crore post-merger balance sheet of his bank, Rs
10,000-crore stronger than its pre-nuptial avatar. And that's not taking into account
the foothold that the former GTB gives him in the prosperous South, something
that OBC had been trying unsuccessfully to do for many years now; the status of a
national bank that comes along with it is the icing on the cake.
OBC already had a substantial presence in the West; and GTB provided it with a
ready-made plugged-and-playing infrastructure in the South. In one stroke, OBC
also doubled its presence in the two regions and gained some much-needed
technological muscle:
GTB's 275 ATMs multiplied its existing strength of 72 by a factor of almost five,
making it the third largest ATM operator among PSU banks. Narang
simultaneously expanded his roster of depositors by nearly a million well-heeled
customers and added 103 branches to his existing network of 1,013.
For now, he has completed his immediate task of calming GTB's 8.34 lakh retail
investors and has revised his growth target for the current fiscal. Before the merger
proposal, OBC had targeted a 25 per cent growth in 2004-05. This has been raised
to 30 per cent. The goal: A balance sheet size of Rs 80,000 crore.
Mr K.N. Prithviraj was appointed as the new Chairman and Managing Director,
Oriental Bank of Commerce later during the years.
Oriental Bank of Commerce in consultation with all the Book Running Lead
Managers to the issue, has fixed the issue price at Rs 250 per share.
REFERENCE-
1.Pilat, D. (1997), “Regulation and Performance in the Distribution Sector”, OECD
Economic Department, Working Paper, No. 180.
2. Economic Survey (2005-06), Ministry of Finance, Government of India.
3. www.investopedia.com
4. Reserve Bank of India: Publications Various Issues.
5. The Banker, July 2007
6. www.banknetindia.com

18. Operational Synergies
Oriental Bank of Commerce Acquires Global Trust Bank Ltd (August '04)
Intent:-For Oriental Bank of Commerce there was an apparent synergy post merger
as the weakness of Global Trust Bank had been bad assets and the strength of OBC
lay in recovery.10 In addition, GTB being a south-based bank would give OBC the
much-needed edge in the region apart from tax relief because of the merger. GTB
had no choice as the merger was forced on it, by an RBI ruling, following its
bankruptcy.
Benefits :-OBC gained from the 104 branches and 276 ATMs of GTB, a workforce
of 1400 employees and one million customers. Both banks also had a common IT
platform. The merger also filled up OBC's lacunae - computerisation and high-end
technology. OBC's presence in southern states increased along with the modern
infrastructure of GTB.
Drawbacks :-The merger resulted in a low CAR for OBC, which was detrimental
to solvency. The bank also had a lower business growth (5% vis-a-vis 15% of
peers). A capital adequacy ratio of less than 11 per cent could also constrain
dividend declaration, given the applicable RBI regulations.
The crisis-ridden Global Trust Bank would be merged with Oriental Bank of
Commerce, the Reserve Bank of India said.Oriental Bank of Commerce also
announced it would take over the troubled Global Trust Bank facing severe
financial problems, that had prompted the RBI to impose a three-month
moratorium."The scheme (of merging the GTB with OBC) has been approved by
the RBI," Oriental Bank of Commerce chairman B D Narang told PTI.The GTB
Crisis: Complete Coverage.The scheme of amalgamation would be put on the Web
site and RBI and the Securities and Exchange Board of India are looking to
proceed forward in the matter expeditiously, RBI executive director
UshaThoratsaid.The scheme of amalgamation would be available for comments till
August .There will be no swap arrangement for GTB shareholders when the private
sector bank is amalgamated with the Oriental Bank of Commerce.OBC had made
the offer for the merger proposal as it perceived synergy between these two banks,

19. she said, adding that the merger will be effective once the government sanctions
the scheme of amalgamation.The Centre had on July 24 placed the crisis-ridden
Secunderabad-based GTB under moratorium for a three-month period till October
23, partially freezing its operations following 'wrong' financial
disclosures.Meanwhile, the RBI said it will provide support for permitted cash
withdrawals and allow operation of safe deposit lockers and demat accounts as
usual even as depositors rushed to withdraw funds from branches across the
country.The one million-odd depositors of the Global Trust Bank (GTB) can now
breathe easy because the RBI has found a knight in shining armour for the
distressed bank. Sadly, this cannot be said of thousands of retail investors who are
holding the GTB stock. GTB's amalgamation with the Oriental Bank of Commerce
has nothing for investors because the RBI has ruled out any share swap deal
It is ironical that the word "trust", which is at the very centre of the bank's name, is
totally lacking in its depositors today. Burdened with bad loans, the beleaguered
bank finally met its nemesis when the RBI declared a moratorium on the bank on
July 24, freezing depositors accounts for three months.As per the RBI's
amalgamation plan, if there are no objections, GTB will be evaluated by a panel of
auditors and the merger will proceed on the basis of their report. According to B.D.
Narang, CMD of Oriental Bank of Commerce, "Though there is enough synergy
between the two banks in terms of technology and operations, if GTB's total
deficits exceed Rs.750 crore then it will make the amalgamation very difficult."
Considering that GTB has not disclosed its financials over the past few quarters,
only the RBI knows the true extent of its losses.
Global Trust Bank - Trouble HistoryClick here to EnlargeHowever, GTB's
implosion should not come as a surprise. The bank took excessive market-related
risks in the past. In 1999, taking advantage of the regulatory gap which only
capped a bank's direct exposure to capital markets at 5 per cent, GTB gave
advances of nearly Rs.1,700 crore (50 per cent of its total advances) to stockmarket
players against shares. After the markets tanked in February 2001, the advances
against shares fast turned into bad loans. This had a cascading effect on GTB's
finances.
There were several other chinks in the bank's armour. GTB has changed three
auditors in the past three years. But the Central bank has been sending confusing
signals on GTB. In 2002, the RBI declared that the bank's net worth had turned
negative. But in June 2002, it gave the bank a clean chit on liquidity even though

20. 9.23 per cent of its net advances were bad loans.However, investors never quite
knew what was going on at GTB as the central bank sent out conflicting signals
over its health. On its part, GTB did all it could to please RBI, including the
appointment of SudhakarGande as MD in March 2002. Gande's mandate was
clear-recovery of bad loans, capital infusion and increasing the provisioning
against potential NPAs.SudhakarGande, Managing Director, GTB"Staff,
depositors are safe. My stint could have been better." SudhakarGande, Managing
Director, GTB.In 2003, the bank took special permission to delay its results by six
months. The results for 2002-3 were announced at the end of September, showing
a loss of Rs.272 crore. NPAs had ballooned to 19.77 per cent of advances. Only
Rs.290 crore was recovered. Gross NPAs stood at Rs.915 crore, accounting
for28per cent of advances.
Despite this, the RBI issued a press release on September 30, 2003, commending
the cleaning up of books by the bank. The release says: "The RBI has noted that
even though the financial statements show an overall loss, the bank has made an
operating profit for the year 2002-3. The RBI welcomes the decision taken by GTB
and its board of directors to clean up the balance sheet. The cleaning up of the
balance sheet is essential for sound functioning of the bank and for the good health
of the financial system."NIGHTMARE BEGINS: Depositors queue up at a GTB
branch in HyderabadThough RBI's spokesperson maintains that the last line of the
note suggested that all was not well with the bank, the market begs to differ.
Interestingly, barely five months after this back patting, a RBI report said GTB was
hiding the extent of its bad loans.
Motives Behind Consolidation
Based on the cases, we can narrow down the motives behind M&As to the
following :
•Growth - Organic growth takes time and dynamic firms prefer acquisitions to
grow quickly in size and geographical reach.
•Synergy - The merged entity, in most cases, has better ability in terms of both
revenue enhancement and cost reduction.
•Managerial efficiency - Acquirer can better manage the resources of the target
whose value, in turn, rises after the acquisition.
•Strategic motives - Two banks with complementary business interests can
strengthen their positions in the market through merger.

21. •Market entry - Cash rich firms use the acquisition route to buyout an established
player in a new market and then build upon the existing platform.
•Tax shields and financial safeguards - Tax concessions act as a catalyst for a
strong bank to acquire distressed banks that have accumulated losses and
unclaimed depreciation benefits in their books.
•Regulatory intervention - To protect depositors, and prevent the de-stabilisation
of the financial services sector, the RBI steps in to force the merger of a distressed
bank.
Future of M&A in Indian Banking
In 2009, further opening up of the Indian banking sector is forecast to occur due to
the changing regulatory environment (proposal for upto 74% ownership by Foreign
banks in Indian banks). This will be an opportunity for foreign banks to enter the
Indian market as with their huge capital reserves, cutting-edge technology, best
international practices and skilled personnel they have a clear competitive
advantage over Indian banks. Likely targets of takeover bids will be Yes Bank,
Bank of Rajasthan, and IndusInd Bank. However, excessive valuations may act as
a deterrent, especially in the post-sub-prime era.
Persistent growth in Indian corporate sector and other segments provide further
motives for M&As. Banks need to keep pace with the growing industrial and
agricultural sectors to serve them effectively. A bigger player can afford to invest
in required technology. Consolidation with global players can give the benefit of
global opportunities in funds' mobilisation, credit disbursal, investments and
rendering of financial services. Consolidation can also lower intermediation cost
and increase reach to underserved segments. The Narasimhan Committee (II)
recommendations are also an important indicator of the future shape of the sector.
There would be a movement towards a 3-tier structure in the Indian banking
industry: 2-3 large international banks; 8-10 national banks; and a few large local
area banks. In addition, M&As in the future are likely to be more market-driven,
instead of government-driven.

22. EFFECTS ON EMPLOYEES OF GLOBAL TRUST BANK
A large number of employees of the erstwhile Global Trust Bank (GTB) may lose
their jobs if the Oriental Bank of Commerce (OBC) implements the report on
human resource alignment prepared by the National Institute of Bank Management
(NIBM) in totality.
GTB had 1,300 people on its rolls when it was merged with OBC.
Following the amalgamation, OBC has paid previous GTB employees the salary
they received prior to the merger.
OBC chairman and managing director B. D. Narang said, 'We are permitted,
however, under the scheme of amalgamation to realign the remuneration of
employees previously with GTB and continuing with us, with our existing
employees of corresponding rank or status. We had appointed NIBM to prepare a
report on how best to effect this realignment. NIBM has already tabled the
report.'OBC will start implementing the report from May 15 and the bank expects a
realignment by December. 'The report will be placed before the OBC board for an
approval on April 29,' said Narang.
The red herring prospectus filed by the bank, which is coming up with its second
public offer, says that primarily because of this expected realignment of salaries,
367 of erstwhile GTB's employees have resigned and the bank is not certain about
the employment continuity of the GTB employees with the bank in the coming
months.
Narang said the Reserve Bank of India has been informed that OBC will continue
with these employees for three years.
'After that the OBC board will decide whether to continue with them,' the CMD
added.
GTB is expected to register some operating profit from the quarter ending June 30,
2005. In the quarter ended March 31, 2005, it had suffered a loss of Rs 69 crore.
OBC has filed criminal suits against the GTB creditors amounting to Rs 984 crore.
'We expect to recover 30 per cent of this amount in the current fiscal,' Narang
added.
- B. D. Narang in Calcutta( the telegraph)

23. CONCLUSION:
Human resource management professionals must be capable of handling
many uniquechallenges. One of the most prevalent challenges that HR
professionals face and the one that requires the utmost attention is in a
merger or acquisition. HRM plays a critical role in the success or failure of
mergers and acquisitions. Involving HR from the very earliest of planning
stages can make all the difference in both the financial and the human
outcomes.
Given the fact, mergers/amalgamations are envisaged to lead to synergy
effects; return on assets is expected to increase while operating cost to assets
ratio is expected to decrease during the post-merger period.
For Oriental Bank of Commerce there was an apparent synergy post-merger
as the weakness of Global Trust Bank had been bad assets and the strength
of OBC lay in recovery. In addition, GTB being a south-based bank would
give OBC the much-needed edge in the region apart from tax relief because
of the merger. GTB had no choice as the merger was forced on it, dated 14th
August 2004, by an RBI ruling, following its bankruptcy. OBC gained from
the 104 branches and 276 ATMs of GTB, a workforce of 1400 employees
and one million customers. Both banks also had a common IT platform.
In the emerging scenario, the supervisors and the banks need to put in place
sound risk management practices to ensure systemic stability.Global Trust
Bank (Uganda) Limited (GTBU), commonly referred to as Global Trust
Bank (GTBU), was a commercial bank in Uganda which started operations
in 2008 and was closed down in 2014. Its headquarters were located in a
five-storey building on Kampala Road in the center of Uganda’s capital,
Kampala.[2] It was licensed as a commercial bank by Bank of Uganda, the
central bank and national banking regulator.
Retention is an important concept that has been receiving considerable
attention from academicians, researchers and practicing HR managers. In its
essence, Retention comprises important elements such as the need or
content, search and choice of strategies, goal-directed behavior and social
comparison of rewards, reinforcement, and performance-satisfaction.
Motivated employees come out with new ways of doing jobs. They are
quality oriented. They are more productive. Any technology needs motivated
employees to adopt it successfully. Early theories are too simplistic in their
approach towards Retention. For example, advocates of scientific

24. Management believe that money is the motivating factor. The Human
Relations Movement posits that social contacts will motivate workers. Mere
knowledge about the theories of Retention will not help manage their
subordinates. They need to have certain techniques that help them change
the behavior of employees.
On Friday 25 July 2014, the Bank of Uganda, revoked the banking license of
Global Trust Bank and closed down the institution with immediate effect.
Some of GTB's assets and liabilities, including customer deposits and loan
accounts were acquired by DFCU Bank. Those assets not acquired by DFCU
will be liquidated. Bank of Uganda cited two reasons for the closure: (a)
Lack of profitability. At the time of liquidation, GTB had accumulated
losses totaling UGX:60 billion (US$24 million) and (b) Lack of "accuracy of
the information provided to government".In December 2008, Richard
Byarugaba, a Ugandan with over 25 years of banking experience became the
first Managing Director of Global Trust Bank. Prior to that, Byarugaba
worked in various capacities at Barclays Bank, Nile Bank Limited and
Standard Chartered Bank. He was Chief Operations Officer at Barclays
Bank immediately before joining Global Trust Bank. He had held several
board positions at Standard Chartered Bank, Nile Bank, Hospice Africa,
Palliative Care Association of Uganda and the Uganda Institute of Banking
and Financial Services. He is also a past president of the Uganda Institute of
Bankers.[12]
In August 2010, following the appointment of Richard Byarugaba as the
Executive Director of the National Social Security Fund, Charles Ajaegbu, a
native of Nigeria, with over 20 years of banking experience, was appointed
Managing Director of the bank.[13] He holds degrees in Law and Business.
Prior to that, he served as the Director of Business Development at Global
Trust Bank.
As of May 2014, the Managing Director of GTBU was
MorenikejiOludotunAdepoju, a native Nigerian with over 22 years of
banking experience in Anglophone and Francophone West Africa.On 14
August 2004, Global Trust Bank Limited (GTB) was amalgamated into
OBC. GTB was a leading private sector bank in India that was associated

25. with various financial discrepancies leading to a moratorium being imposed
by RBI shortly before being merged into OBC.
As of May 2014, Global Trust Bank had a network of branches at the
following locations:[7][8]
Operational branches1.Busia Branch - 1 Sofia Road, Customs Yard, Busia
2.Butaleja Branch - Butaleja District Headquarters, Butaleja
3.Bwaise Branch - 975-976 Sir Apollo Kaggwa Road, Bwaise, Kampala
4.Entebbe Airport Branch - Entebbe International Airport, Entebbe
5.Head Office - 2A Kampala Road, Kampala (Main Branch)
6.Kibuku Branch - Kibuku District Headquarters, Kibuku
7.Kikuubo Branch - 1st Floor Nabugabo Business Centre, Kampala
8.Malaba Branch - Malaba Customs Building, Malaba
9.Mbarara Branch - 4 Bulemba Road, Mbarara
10.Mbale Branch - 1-3 Manafwa Road, Mbale
11.Mukono Branch - 36 Jinja Road, Mukono
12.Mutukula Branch - Mutukula URA Building, Customs Bond, Mutukula
13.Najjanankumbi Branch - 1032 Block 12 Entebbe Road, Najjanankumbi
14.Nateete Branch - 757 Wakaliga, Nateete, Kampala
15.Nkozi Branch - Uganda Martyrs University Campus, Nkozi
16.Owino Branch - St. Balikuddembe Market, 19 Nakivubo Place, Kampala
17.Paidha Branch - 21 Nebbi- Arua Road, Paidha
18.Pallisa Branch - 8 Kasodo Road, Pallisa
19.Rubirizi District - Rubirizi, Rubirizi District
20.Serere Branch - Serere District Headquarters, Serere
21.Tororo Branch - 11/9 Mbale Road, Tororo
Branches in development1.Amuria Branch - Amuria, Amuria District
2.Gulu University Branch - Gulu University Campus, Gulu
3.Kamwenge Branch - Kamwenge, Kamwenge District
4.Kole Branch - Kole, Kole District
5.Zombo Branch - Zombo, Zombo District