NIFT PG 2014 Question Paper with solutions

  ING Groep NV, the biggest Dutch financial services company, is said to be seeking a buyer for its 43% stake in ING Vysya Bank, as the prospects of limited purpose banking in India and tough competition in retail market make it rethink its local strategy, five people familiar with the thinking said. ING, which has been selling assets across the Asian region and some in Europe itself to repay the Dutch government for bailing it out from the 2008 credit crisis, may exit the domestic banking business comprising retail, corporate and treasury, to focus on corporate banking, they said. The group, which also has to bolster capital to meet the Basel III regulations, may get at least $600 million at current market prices, or even more for the stake depending on the transaction. There is no certainty that a deal will happen. Although ING Vysya may be an attractive asset for every private sector bank because of its clean books, 575 branches and loyal customers, Kotak Mahindra Bank seems to be best placed to benefit from the acquisition of ING Vysya, say analysts. “It is a very good business and it (ING Vysya) provides Kotak the opportunity to scale up,” said chief mentor BMR & Associates, an advisory firm. Although Kotak’s market value is about six times that of ING Vysya, Kotak’s loan assets is about ₹ 50,539 crore, compared with ING’s ₹ 33,575 crore, regulatory filings show. ING’s ₹40,000 crore of deposits, of which a third is low cost, and its customer loyalty may be the most attractive part. But Kotak said it is not negotiating for a takeover. “We have not been approached for purchase of shares of ING Group in ING Vysya Bank,” said a Kotak Mahindra Group spokesman in an email response. “We have had no negotiations with officials of ING Vysya Bank on this matter.” For Kotak, it might make sense to go for a stock-swap deal since it could achieve twin objectives of the management, said one of the persons familiar with the thinking. There will be no cash outflow, and at the same time help founder Uday Kotak to reduce his stake in the bank to meet regulations. The Reserve Bank of India last June directed. Uday Kotak to lower his stake in the bank to 10% over the next eight years. It is at 44% now, filings show. International banks in India are redrawing their strategy as the industry goes through tough capital requirements after the credit crisis. Institutions such as JPMorgan Chase & Co have decided to remain a corporate and investment banking company in India, and others such as Barclays are moving toward that, shedding retail. The Reserve Bank of India’s decision to possibly mandate local incorporation may lead to further changes