Kotak Mahindra Completes ING Vysya Takeover

As more private banks lined up to join India’s banking sector, two leading private banks in the country announced their merger.

Kotak Mahindra Bank (KMB) acquired ING Vysya Bank for $2.5 billion (about Rs15,000 crore). Under the share swap ratio approved by KMB’s board, ING Vysya’s shareholders will get 725 equity shares of Rs 5 each of KMB for every 1,000 equity shares of Rs10 each that they hold.

KMB and ING Vysya issued similar notices regarding the amalgamation to the stock exchanges, after market hours. Once the amalgamation goes through, the resulting entity will leapfrog YES Bank to become the fourth-largest private sector bank. As at September-end, the combined entity had a business size (deposits plus advances) of Rs 2,13,261 crore as against YES Bank’s Rs 1,42,161 crore.

Kotak Mahindra Bank, which has established itself in the consumer and wholesale banking segments, will benefit from ING Vysya’s strong SME business. The branch network of the new entity will rise to over 1,200, while the head count will swell by 10,590 to 39,811 employees.

The merger will see the promoter and the promoter group’s shareholding in KMB getting pared to 34 per cent in the new banking entity. The ING Group will end up owning 6.5 per cent.