UTI Bank, GTB merger may be put on hold

UTI Bank, GTB merger may be put on hold
ENS ECONOMIC BUREAU

Mumbai, APRIL 2: The mega merger between UTI Bank and Global Trust Bank is facing rough weather with the Securities and Exchange Board of India finding insider trading in GTB shares prior to the merger announcement. Sebi's interim report to the Reserve Bank of India has pointed out the involvement of leading stock broker Ketan Parekh and his companies in manipulating the price of Global Trust Bank scrip since October last.

"The merger is unlikely to go through," RBI sources said. UTI Bank sources had last week said that it would not hesitate to drop the proposed merger of UTI Bank with GTB if a fresh swap ratio was not arrived at. UTI also wants the name ``Global'' to be dropped from the new merged entity, UTI Global Bank.

Even as rumours are flying thick and fast, Ramesh Gelli has got a three-month extension to continue as chairman of GTB. "The GTB board recommended his name and the RBI has approved this proposal," RBI sources said.

GTB, it is learnt, is also not keen on altering the merger ratio and the name of the new entity. The tough stand of UTI Bank comes in the wake of the name of GTB chairman Ramesh Gelli being mentioned in connection with the price-rigging of GTB shares in the investigation report by the Sebi.

In its eight page report to the RBI, SEBI said there was proof of GTB scrip being `ramped up' prior to its merger decision with UTI Bank, a SEBI official said here today. Parekh, who is now in CBI custody in connection with the Bank of India pay order of Rs 137 crore scam, was using his companies to allegedly misuse the banking channels to carry out operations in the stock market, sources said.

The report said Parekh, who held at least five per cent GTB stock, allegedly carried out operations in the scrip through a foreign broking house. It states that there was a case of insider trading in the stock and it would be established by the time the regulator hands over the final report some time next month.

Parekh allegedly used his companies N H Securities, Triumph International, Panther Finance and Class Credit for rigging up the GTB prices, the official said. The regulator had sought data from Parekh, who expressed his inability to do so as the Income Tax authorities had seized documents following a search at his residence and office premises last week, the official said.

SEBI carried out investigations into the price movement of GTB scrip between October and January 2001 but is now to go backwards to study the price trends, the official added.

Accounting firm Deloitte, Haskins and Sells had conducted a second valuation at the instance of UTI Bank and RBI, and had arrived at the same ratio of nine UTI Bank shares for every four GTB shares held.

Two more PSU banks hit
MUMBAI:Around Rs 50-70 crore of two more public sector banks is stuck in co-operative banks in Gujarat. One Mumbai-based bank has an exposure of Rs 20-30 crore while a UP-based bank has got Rs 30-40 crore stuck in Gujarat.

The Reserve Bank of India has asked all scheduled commercial banks to provide details of the losses they estimate from various transactions entered into with urban cooperative banks. The banks have been told to reply with the details to the central bank by April 3. The RBI letter, sent late last week, specifically points to the losses the banks estimate on account of pay-order transactions, their exposure in the call money market and also in bullion trading deals with the cooperative banks.

This move by RBI is the first major effort to try and quantify the losses staring the banking sector in the face, following the Madhavpura Mercantile Cooperative Bank (MMCB) scam in which Ketan Parekh has also been arrested.