The GTB - UTI Bank Merger
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ICMR HOME | Case Studies Collection
Case Details:
Case Code : FINC004
Case Length : 7 Pages
Period : 2001
Pub. Date : 2002
Teaching Note : Available
Organization : GTB
Industry : Banking
Countries : India
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FINC004) click on the button below, and select the case from the list of available cases:
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Please note:
This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
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Excerpts Contd...
The SEBI Probe
Amidst all these developments, SEBI was probing the role of Parekh in the unusual price spurt in GTB stock prior to its merger announcement with UTI Bank.
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SEBI found that Parekh was one of the most active traders in the stock and had substantial purchases in the scrip during October to December 2000. Parekh also sold actively.
SEBI sought client details from five entities, which were directly linked, to Parekh and scrutinized client details of some other brokerage houses to identify whether there was any concerted attempt to push up the share price.
SEBI found that there was a prima facie case of manipulation owing to the nature of the spurt in the scrip price...
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The Merger is Called Off
In mid March 2001, it became clear that the proposed merger of UTI Bank with GTB might not come through, as the SEBI preliminary investigation report found manipulation and rigging in the share price of GTB prior to the merger announcement.
L. K. Singhvi, senior executive director, SEBI, said, "The investigation, prima facie, indicates that there was manipulation in GTB shares during October-December 2000.
Since the merger proposal was pending with the Reserve Bank of India, we have sent our report to the RBI." "he final report will be submitted shortly", he added. Another SEBI official hinted that the investigation revealed that the manipulation in the GTB scrip "was motivated and done with the help of the bank's senior management team". SEBI's findings had not only questioned the merger proposal but also opened a Pandora's box that may put the management in a major jam...
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