rediff.com: Transcript of the Ramesh Gelli Chat


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'In the future, size will be critical'

Bombay, January 31, 2001, 3:00 pm IST: Mr Ramesh Gelli, chairman, Global Trust Bank, was just a wee bit late but made up by staying a bit longer despite pending appointments.

Administrator : Friends, Mr Ramesh Gelli, will log on at 3 pm IST. Please note that that Mr Gelli is a banker, and questions should pertain to banks, the economy and the cost of the earthquake to the nation.

Administrator : Everone, Mr Ramesh Gelli has just arrived and will commence the Chat shortly.

Administrator : Everone, Mr Ramesh Gelli is just freshening up. He will log in a couple of minutes.

Administrator : Ladies and Gentlemen, Mr Ramesh Gelli has logged on. Fire your questions!

Moogambo : Good Afternoon Respected Sir,Do all banks in India plan to contribute to the Prime Minister Relief Fund?
Mr Ramesh Gelli : Welcome everyone to the chat on rediff.comMoogambo: I am confident that the banking industry in India willcertainly come to the rescue ofthe affectd people in the state of Gujarat in every possible way. Some of these are make donations for the relief, as GLobal Trust Bank and all the employees have deicded to do so. OR, extend special relief loans to the affected people at a concessional rate with a moratorium to reconstruct their businesses. OR, reschedule the existing loans and even make them soft loans.

anilwawa : Sir, I just cant seem to understand with so many banks vying for a share of the pie , ANZ/Starndarchartered, HDFC/Timesbacnk,HSBC,Amex, GTB/UTI etc etc etc is the pie large enough to sustain everybody??Whats the break up, how many can win, how many can just survie in tihs scenario
Mr Ramesh Gelli : Anilwava: The banking industry in India has been growing at a compunded growth rate of 15 per cent per year over the last 15 years. It is expected to grow at the same rate over the next 10 15 years at least. For example, for this ywear 2001, the industry may add about Rs 150,000 crore (Rs 1.5 trillion) to its deposits. ALso, in India, financialisation of assets is around 0.6 while even in some of the developing countries, it is about 1.0. Thus there is scope for the baning industry to grow much larger than what it is today and does offer opportunity to banks. However, this opprotunity will be more favourable for banks which are technology-savvy, innovative in products and service, highly customer focussed, and build a strong brand.

mridu : There has been a consistent performance by GTB whereas there is an accelerated performance by UTI only in the last one year. Mr.P.J.Nayak's arrival looks like a wake-up call for an organisation which was sleeping. Considering this, the swap ratio of 9:5 is unjustifiable. Your comments, please.
Mr Ramesh Gelli : Mridu: I do agree generally with your observation, Mridu, about the performance of the two banks. The swap ratio of 9:4 (not 9:5 as you put it) was arrived at taking into consideration a number of quantitative and qualitative factors, which included the SEBI price ratio; then the book value ratio; then the EPS ratio and maintainablity of profits ratio. In addition, factors such as the core strengths, the size, the structure and the brand values -- current and potential -- were taken into account. Based on that, all concerned agreed to the ratio of 9:4.

suraj : Among the two brands UTI bank and GTB, GTB is popular, more famous, has a great ad campaign (one of the chatter has also referred to it). The brand strength is far superior then UTI bank. The merged bank should have continued with the GTB name or at least Global Trust UTI bank.
Mr Ramesh Gelli : Suraj: There is no doubt that is a strong brand. UTI is also a very strong brand. This has been fully exploited bythe UTI Bank in this year. Together, UTI Global Bank does make a very strong brand. And, this we believe, will be fully exploited to build an even stronger brand in UTI Global Bank.

Jawahar : Mr. Ramesh,You were the reason for the success of GTB and and the customer base. After the merger what will b your role. We see a role for you during the merger. Dont yu think this will erode the customer loyality
Mr Ramesh Gelli : Jawahar: We are working out a detailed process of integration to ensure a smooth and efficient process. The objective is to make sure that the people's issue is handled with care and compassion; integration is achieved efficiently and speedily by acting with sensitivity and decisiveness. Focus on customer service is maintained and capture the best practices among the banks. We are therefore confident that there will be far fewer issues that will be thrown up and a high level team constituted, will address such issues.

Deepak : 'We have the strength to be the largest private bank in India' how u say so confidently? what are the point u have. can u tell me
Mr Ramesh Gelli : Deepak: The merger takes the new entity -- UTI GLobal Bank -- straightaway to about Rs 20,000 crore in balance sheet size. THis bank has an opprtunity to grow at about 50 per cent per year which can take it to Rs 60,000 crore in assets in three years' time. In the meanwhile, if there are other good fits, more mergers might take place. Thus, the opportunity exists, the strengths are available, and the ambition and the desire are present. Hence the confidence, Deepak.

Bikram : Dear sir, Where would the combined entity concentrate. Which products and industries?
Mr Ramesh Gelli : Bikram: Both the banks have terrific strengths in different areas. Both banks also have very huge dreams and high ambitions. What we propose to do is to jointly work out a vision for the new bank, taking into account the opportunities in the market, the strengths we possesss, and the future scenario. We hope to do this within the next three months.

venkateswararao : Mr. Gelli, GTB was your brainchild and in fact you have developed it. At this juncture don't you feel sad as you have merged with UTI bank
Mr Ramesh Gelli : Venkateswara Rao: Yes, it has not been an easy decision for me. But, as I look into the future, size is very critical. And, through the merger, we get a benefit of three years lead time in achieving the size and growth. This merger provides terrific strength to the bank and makes its future more certain. Thus, while it is good for the bank, it is good for the members of the bank also.

warrior : Sir I am an account holder at bot GTB and UTI bank. I find that the customer services at GTB is superior and in UTI bank there is a lot of room for improvement. How will you get the UTI bank to perform at GTB customer satsifaction levels.
Mr Ramesh Gelli : Warrior: One of the objectives of integration is to capture the best practices among the two banks. Therefore, I believe that the best of the two banks will accrue to the new bank.

GTBian : when you insurance co will be merged
Mr Ramesh Gelli : GTBian: Good afternoon. The proposed insurance company will have the strength and support of UTI Global Bank and the UTI. UTI, as you are aware, is a very strong player and the largest in the world, in terms of number of investor number. With UTI being one of the co-promoters, this company can benefit from the strengths of the UTI, and therefore, has the potential to become one of the largest insurance companies. (UTI has about 50-60 million unit-holders, all potential insurance buyers).

sps : Sir,You have been assigned task of heading insurance wing ,proposed to be floated by UTI bank/GTB entity.UTI bank itself being a subsidiary of UTI ,meant for core objective of BAnking only and UTI will itself enter /float its own insurance subsidiary .SO it will be ended up having two insurance company with its roots in UTI ?
Mr Ramesh Gelli : SPS: Regarding the insurance query, it is now agreed that the UTI Global Bank and UTI will be co-promoters of the proposed insurance company and they would not pursue two different companies.

Administrator : Amit, please mind your language and cut out any expletives.

UTIian : Sir you have said this is a merger of equals. Dr.Nayak has openly admitted GTB has a superior Treasury, IT, Retail banking and corporate banking team. He has also said that GTB is superior in support functions. GTB's staff have high confidence level and are more aggresive than most UTI bank staff. There are many of us who are nervous on how our new bosses will react. What are you going to tell you staff (our new bosses)
Mr Ramesh Gelli : UTIian: I believe that both the banks have unique strengths. It is decided that the merged entity will approach each issue very objectively, without bias. Every member of the organisation is a key resource for its future. The desire would be to make each member as efficient and as productive as possible through a very positive envirnonment and high levels of motivation. I see enthusiasm for this merger in both the banks. Thus I do NOT see any reason for any individual to feel diffident about his or her future. Regarding the senior management, I believe that in both the banks, they have the maturity and ability to intergrate with different people, built new teams and ability to provide leadership and motivation.

illusions : sir, congrats on the merger. Am curious to know as to how you intend to merge the working culures of UTI and GTB
Mr Ramesh Gelli : Illusions: We have already created an integration team comprising of two senior members from the UTI Bank and two senior members from Global Trust Bank. This team has identified areas in which teams have to be further created who will identify all the issues of integration in their respective areas, study the internal processes, identify the best practices and solutions and resolve the issues, if any, to be raised to the higher level, which will then address these issues and find resoltions. It has been further agreed that Mr P S Subramanyam, chairman, UTI, Dr P J Nayak, Mr Sridhar Subhasri and I would work together to ensure early completion of this integration.

Veekay : MR.GELLI, WHAT IF THE INDIAN GOVT. GOS ON WITH ITS IDEA TO PRIVATISE THE PRESENT BANK SECTOR
Mr Ramesh Gelli : Veekay: The privatisation will help the banking industry to become more efficient and competitive. In any economy, if a large sector is not as competitive as the best banks in the world, the economy stands to lose. Therefore, it will be useful for the economy and necessary for the government to go ahead with this process.

Administrator : Seema, stop posting foolish statements.

Mr Ramesh Gelli : Ladies and gentlemen, TWO more questions please. Thank you for your interest but I will catch up some other time. I got to leave now. I hope you understand... OK, two more questions please....

-=:MaNiK:=- : sir,GTB is too much involved in stockmarket activities..which is not a usual convention for a good bank ..moreover it has been in association with the recent IT bull Mr. Ketan Parekh ...what dou think will happen if the helll breaks loose and KP defaults in a huge way to GTB ?...what liablities do u have then?
Mr Ramesh Gelli : Hemant, Manik and Hari: Global Trust Bank is strong in broker finance and close to 95 per cent of its lending to brokers is to meet the pay-in-pay-out financing requirement. And, for the DVP payments. Since we also have the pool account and the settlement account, the risks are fully boxed. Further, for any such exposure, adequate security is taken whose value is monitored every day and shortfall is insisted to be made up. Our understanding of the payment systems and very comprehensive risk management systems protects us from such risks as highlighted. Hari: The merger would certainly produce a much stronger bank than either of the two. I am confident that the performance and the results of the combined bank will be far superior than the sum of the two. I do hope that the analysts recognise this.

GTBian : admin pl. tell - it is over or not - we have other good work.
Mr Ramesh Gelli : GTBian and others in this CHAT ROOM: Let me thank you for your interest in the subject and am personally convinced that this merger would prove to be a benefit for the customer, and good for the banking industry. Any merger process is not an easy one. There will be transition issues but more importantly, it ultimately benefits both the employees and the shareholders. It has been a bold decision on the part of both the banks and is indeed a historic one. We fully realise that there would be close watching on the developments with great interest from many people. I seek your good wishes and support to make this a success. Thank you very much. ps: There were many questions and I am leaving them quite a few unanswered. I regret the same but I will try to do my best in responding to these questions separately. OK. Thank you very much.

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