Mehsana UCB Becomes ‘Merger Champion'

Gujarat’s Mehsana Urban Coop Bank sets a bold example of acquiring 5 branches of bankrupt R.S. Coop Bank of Maharashtra:

The Mehsana Urban Coop Bank started its operations in October 1983 under the leadership of Chandubhai Patel, an industrialist and social worker along with a team of traders, industrialists and entrepreneurs in Mehsana. Starting with a single branch, the bank now has 53 branches in the whole of Gujarat and Maharashtra. Recently, it has added 5 more branches by acquiring R.S. Cooperative Bank of Borivli, Mumbai. The inter-state merger took place on 14 April 2019.

LOSS BEARING MERGER

R.S. Bank had a substantial negative net worth and in spite of this Mehsana Urban Cooperative Bank went ahead with the acquisition. Says Vinodkumar Patel, CEO of Mehsana UCB: “Our board took the decision largely looking at the interests of the depositors and employees of the Mumbai bank. The merger is taking place despite R.S. Bank having a huge loss of Ì€ 220 million. In normal instances of merger, a haircut of up to 60%, or even 75%, can be applied, but as a rare gesture to serve the depositors’ interests, we took the decision. We will ensure that all the deposits of in that bank will be honored by us.”

SUCCESSFUL PRECEDENT

Mehsana Urban Cooperative Bank has a similar successful exercise in the recent past. It had acquired Surat Nagrik Sahakari Bank in Surat with 5 branches in 2013. G.K. Patel, chairman of Mehsana UCB, says these branches started functioning under our banner and now they have all turned to be profit-making. “With this experience, our board took the decision in respect of R.S. Bank and we are hopeful of repeating the performance with the support of customers and general public of Mumbai,” says he.