GTB Shareholders To Move Apex Bank Before Pursuing Legal Recourse

Hyderabad, July 30 | Updated: Jul 31 2004, 06:10am hrs
The shareholders of the beleaguered Global Trust Bank (GTB) have finally begun to act and fight for their dues. While everyone, including the RBI and the government, were concerned over the depositors, the small investors of GTB believe that they have been left to fend for themselves. They are in the process of preparing a paper arguing that the investors also need to get some value against their shares. Interestingly, a research paper done by Kotak Securities reveals that the GTB share value could be around Rs 8.50 per share. Kotak research has arrived at this figure through a valuation after RBI announced the GTB merger with Oriental Bank. According to the paper, the total NPAs of GTB has been put at Rs 915 crore, which can be written off in three years. This will accrue a tax benefit of Rs 107 crore each year.

We want the regulator to consider returning at least below par value, may be Rs 6 or 8 per share, said an investor, who had purchased shares a week before RBI decided to impose moratorium on GTB.

The investors group in Hyderabad is planning to meet on Sunday to discuss the future course of action. They propose to submit their objections to the RBI before August 7, as per the latters order. We will first represent our case to the RBI before we decide to take the legal recourse, another investor told FE. The investors group is said to be in constant touch with Mr Ramesh Gelli, the promoter, former Chairman, and still a major shareholder of GTB. Mr Gelli is also expected to attend the meeting, one of the investors said. However, he refused to reveal the venue of the meeting.

Mr PC Shrimal, former president of the Hyderabad Stock Exchange (HSE) and a senior stockbroker feels that the shareholders must get the residual value of their shares.

The RBI must take the responsibility of the shareholders and protect their interest on par with depositors, he opined.

Another shareholder said: If the Section 45 (2) does not exist in the Banking Regulation Act, the deal would have been closed only after taking the shareholders approval. Hence, the regulator (RBI) has to come to the rescue of the shareholders and protect their interests, he added.

Further, to support their argument, the group of investors say that New Bridge Capital - which made a bid for GTB and was rejected by the RBI - has put a value of $350 million. And, they proposed to infuse $200 million initially. This amounts to about 60 per cent of the total value of GTB. So, this substantiates the inherent worth of GTB.

Hence, the investors argue that the regulator must consider this aspect, when they go for a valuation of the bank.