The Fall of United Western Bank
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Case Code : FINC040
Case Length : 15 Pages
Period : 1996-2006
Organization : United Western Bank.
Pub Date : 2006
Teaching Note :Not Available
Countries : India
Industry : Banking
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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.
The Moratorium Contd...
It had 130 branches in the rural and semi-urban areas of Western India.
On September 13, 2006, the RBI announced the merger of the Industrial
Development Bank of India (IDBI) and UWBL. The merger came into effect from
October 03, 2006. IDBI offered a price of Rs. 28 per share to UWBL's
IDBI benefited from UWBL's vast branch network as the merged entity had 425
branches as against 195 of IDBI alone. The asset base of IDBI increased by Rs.
71.6 billion7. Commenting on the merger, Kirit Somaiya (Somaiya), the President
of Investors Grievances Forum8 said, "For
the first time, the interests of both depositors and shareholders have been
UWBL was founded by Waman Ganesh Chirmule (Chirmule)10 in 1936. It started its
operations on March 08, 1937 (Refer Exhibit I for the logo of UWBL). In the
year 1951, UWBL was declared as a Scheduled Bank11, under
Scheduled Commercial Banks (in the private sector)' group.
In 1956, the Union Bank of Kolhapur was merged with UWBL followed by the
merger of Satara Swadeshi Commercial Bank Limited12
too in 1961. In 1969, UWBL obtained the status of a 'B' class bank and was
upgraded to 'A' class in 1974.13
Over the decades, UWBL became one of the most preferred private sector
commercial banks in western India. It had a vision of being 'A technology
savvy, customer centric progressive bank with a national presence, driven by
the highest standards of corporate governance and guided by sound ethical
values.'14 UWBL offered diversified
products like automobile finance, housing finance, corporate finance, export
finance, finance for education, finance to SMEs, etc...