Even before champagne splashed around, the merger party ended abruptly. Regulators should tighten the framework to avoid recurrence of such events.It was the sort of a merger that ought to have taken place in a healthy andgrowing market. For M&A is predicated upon expectation of growth. The merger of UTI Bank and Global Trust Bank marked the case of a merger that is poised to benefit both from the commonalties and complementarities. It represented a shift towards mergers driven by market forces. Earlier mergers were attempts to save the sick state-run banks from going under. They tended to turn the healthier partners sick as well. What synergies could the public sector monoliths that suffer from the same ills expect out of a merger? Merger per se makes sense only if the new entity is expected to deliver some synergies. As for the public sector who are setting their houses in order by cutting costs, shedding flab, embracing IT, the first priority is to make themselves fit enough to survive in the post-disinvestment scenario. Therefore, the merger of these two new banks presented a good case of merger necessitated by the dynamics of the market place.

The merger synergies were expected to emanate from two quarters. Among the commonalties is the IT backbone and youthfulness, both of them being positive factors for creation of synergy. Among the complemetarities are the product profiles, client bases and branch network. Thus both these factors are supposed to create value for the combined entity. For GTB which found it difficult to fund its growth (growth is sine qua non for banks to survive in the increasingly competitive environment) the merger meant a growth avenue. For UTIB it meant a strategic move to attain size and critical mass and more importantly shed its public sector perception.

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