Wednesday, September 13, 2006

United Western Bank

The SEBIs credibility as independent regulators have always been suspect and it has always been called a paper tiger. The messy fall of the Global Trust Bank put a dent in the RBIs regulatory credibility.
This i say because both RBI and SEBI failed to act against the politically very well connected ex ceo pomoter Gelli of GTB, whose share transfers to his family members and sales and transactions in the GTB script before it went bust were never investigated. The Depositors including me got back our money but the shareholders especally the small ones lost out.
I was a fd holder in gtb and well remember that RBI had astonishingly commented that the Bank was turning around for the good just before the nasty morotorium, after which i started listening more to Soros(who euphamistically broke the British treasury)instead of listening to Rangarajan .
The Credibility of the RBI had fallen to a low after the Madhavpura Bank fiasco and an Andra regional coop bank went bust and the Promoters(Debtors)fled to South east asia and most depositors(some greedy)who lost their deposits, cursed the regulator saying tha the RBI was sleeping when the banks networth was eroding.

The other big bank to fall recently was United Western Bank, which is now as per reports taken over at a price of 28 per share by IDBI.
Well the Depositholders have something to cheer,as they will soon be able to access their savings. The shareholders will also benifit from the larger than expected valuation of Rs 28.
But Really who will benifit?
Most obviously the Staff, SIICOM, the Central Agri Minister and supporters of Ruling Cong/NCP Coalition in Mah who it is speculated are known to hold some shares and for obvious reasons demanded that the Maharashtrian character should remain.
A leading punting broker and his followers who bought the shares in the crash when the moretorium was announced will also gain handsomely and so will the makharia grouping and family - the root cause of the banks ills -
Someone got to study the transaction patern from the day before announcement of the morotorium till today to get a conclusive picture.
Most or at least some of the small investors in UWB have already lost out as most of them panicked and sold their shares close to 18 in the secondary market fearing the UWB would go the GTB way, and who could blame them.
A detailed analysis of the plan will also give us an idea if the Idbi shareholders would gain because of this merger.
Lastely the Rbi will also gain some lost credibility for successfully handling this crises.


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