Ivey Publishing
Growth Strategies at SVC Bank
Product Number:
9B12M068
Publication Date:
10/24/2012
Revised Date:
10/22/2012
Length:
12 pages (7 pages of text)
Product Type:
Case (Field)
Source:
Ivey/ISB
Primary co-operative banks in India located in semi-urban and urban areas, known as Urban Co-operative Banks (UCBs), were traditionally centered around communities and work place groups. The main business of these banks was lending to small borrowers and business houses but the scope of their operations had increased greatly. The case describes Shamrao Vithal Co-operative (SVC) Bank’s inorganic growth strategy through acquisition of weaker/loss-making UCBS, and the problems and challenges faced by the bank.

It also examines the alternative of organic growth towards its objective of achieving a pan-India presence. One of the fastest growing Urban Co-operative Banks (UCBs) in India, SVC Bank was moving towards this objective. From a total of 38 branches in 2005, with a deposit base of Rs24 billion, the bank had grown to more than 100 branches with a total business of Rs100 billion by 2011. This growth had come in three phases. During 2005-2008, when government policy did not permit opening of new branches, SVC Bank had grown by acquiring three weak UCBs with 24 branches. When the curbs on organic growth were lifted in 2009, the bank aggressively added 26 new branches in two years. During 2010-11, it added 16 new branches and also acquired one UCB with one branch.

Since the vice-chairman of the bank had experienced the advantages and disadvantages of both organic and inorganic growth, he wondered which route made better sense and whether the bank should continue with the kind of aggressive expansion of the past six years.
Learning Objective:
  • To learn about the problems and challenges faced when following a path of inorganic growth through mergers and takeovers.
  • To learn about organic growth and its problems and challenges.
  • To analyze how these strategies in turn are reflected in the financial results and the growth of the organization.
This case fits well with banking post-graduate or an MBA course in strategic management or financial management. It also covers important aspects of bank management.
Issues:
Disciplines:
General Management/Strategy,  Finance,  International,  Entrepreneurship
Industries:
Finance and Insurance
Setting:
India, Large, 2006-2007
Intended Audience:
MBA/Postgraduate
Price:
$4.25 CAD / $4.25 USD Printed Copy
$3.75 CAD / $3.75 USD Permissions
$3.75 CAD / $3.75 USD Digital Download
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