ICICI Bank of RajasthanMerger Submitted To: Submitted By:Prof. S. Bidwai Mohd.

. AbutalibIBS Mumbai 09BS0001290 Bank of Rajasthan, one of the oldest private sector banks in the country, on May 18 announcedthat it would merge with the largest private sector bank, ICICI Ban k. The board of ICICI Bank also agreed to give in-principle approval for merger of Bank of Rajasthan with it subject to duediligence and valuation by an independe nt valuer jointly appointed by both banks. Bank of Rajasthan is a listed bank wi th its corporate office in Mumbai and registered office at Udaipur inRajasthan. As on March 31, 2009, Bank of Rajasthan had 463 branches and 111 ATMs, totalasse ts of Rs.17,224 crore, deposits of Rs.15,187 crore and advances of Rs.7,781 cror e. It made anet profit of Rs.118 crore in the year ended March 31, 2009, and a n et loss of Rs.10 crore in thenine months ended December 31, 2009. ICICI Bank has a network of 2,009 branches and 5,219ATMs.In a day of high drama, BoR stock ros e 19.95% on the Bombay Stock Exchange to close atRs99.50, its year high, and aft er trading hours, the bank sent a release to the stock exchangessaying its board will meet in the evening to discuss a proposal of merging the bank with ICICIBa nk. ICICI Bank stock was down 1.45% to Rs889.35. The ICICI Bank ADR was trading at$38.61 down $0.86 or 2.18 per cent on the NYSE.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 as hare exchange ratio of 25 shares of ICICI Bank for 118 shares of Bank of Rajasth an.ICICIBank said that its willing to pay more than BoRs present market valuation.Ac cording to banking circles, the Tayals, who acquired BoR a decade ago, have been under pressure to sell the old private bank which is grappling with directives from Sebi and RBI. InMarch, Sebi banned 100 entities allegedly holding BoR shar es on behalf of the promoters fromall stock market activities.A little earlier, RBI had slapped a penalty of Rs 25 lakh on the bank for a string of violations l ikedeletion of records in the banks IT system, irregular property deals and lapses in the accounts of a corporate group.In the past few months, the central bank h as virtually taken over BoR. The RBI appointed a newCEO for the bank, which curr ently has five RBI nominated directors. Significantly, well before the downturn, ICICI had considered the possibility of taking over BoR.But the deal fell through as ICICI was unwilling to fork out th e money Mr Tayal had asked for.On 24 th May,ICICI Bank (The Board of Directors of ICICI Bank Ltd ) approved theamalgamat ion of Bank of Rajasthan with it for a share exchange ratio of one share of ICIC I Bank for every 4.72 shares of Bank of Rajasthan.Unsatisfied with the internal valuation arrived at byICICI Bank, Bank of Rajasthan's promoter Tayals have aske d their suitor to sweeten the deal to alevel that would value the Udaipur-based bank at Rs 4,500 crore. After the two banks agreed tomerge, ICICI Bank released an internal valuation that put BoR's worth at nealry Rs 3,040 crore.During the w eek, shares of Bank of Rajasthan gained 74 per cent on the BSE to settle at Rs14 4.40 on 27 th May.On 13 th Aug the country's oldest private sector bank, Bank of Rajasthan Ltd, had become part of ICICI bank Ltd. Accordingly, all Bank of Rajasthan branches have started functioning as ICICIBank branches. This follows the Reserve Bank of India's (RB I) sanctioning the scheme of amalgamation of Bank of Rajasthan Ltd with ICICI Ba nk Ltd.The scheme has come into forcefrom the close of business on 12 August 201 0. Shares of ICICI Bank closed at Rs 963.95, down0.74 per cent, while that of Ba nk of Rajasthan slipped 0.03 per cent to Rs 190.15 on the BombayStock Exchange. K N Bhandari, Director Bank of Rajasthan assured that all BoR employees will be retained and there would be no job losses. The research reports by some foreign institutional investors have given a mixed

reaction to the proposed take-over bid of Bank of Rajasthan by ICICI Bank. JP Mo rgan says the valuations of the deal is very expensive. The swap ratio implies a price of Rs188/share for BoR, which is at a90% premium to the current market pr ice. It would typically take a year for ICICI Bank to set upa similar network to that of BoR and another two years to break-even. Key downside risk to thedeal i s potentially higher non performing loans (NPL