New Delhi: India's new generation private sector Global Trust Bank (GTB) and UTI Bank have decided to merge to create the country's largest private bank in terms of assets, deposits, profits and branch network.

The combined entity, which will be christened as UTI Global Bank, will be formed through a stock swap deal under which shareholders of both GTB and UTI Bank will be offered shares of the proposed UTI Global Bank, the financial daily The Economic Times reported Thursday.

The two bank boards are meeting on January 27 to consider and recommend a swap ratio, based on the valuation done by financial market consultancy major SBI Caps.

According to the daily, the new bank will be based in Hyderabad, which is the head office of GTB. India's central bank the Reserve Bank of India (RBI) has given its approval for the merger.

"The merged entity will be headed by P.J. Nayak (UTI Bank chairman and managing director) as the managing director, while Ramesh Gelli (chairman and managing director of GTB) will join the board and spearhead the insurance venture to be promoted by the bank and UTI," P.S. Subramanyam, chairman of Unit Trust of India, told the daily.

UTI, the parent company of UTI Bank and India's largest mutual fund, will be the principal shareholder of the merged bank, it said.

UTI Global Bank will have a network of 157 branches and 321 automated teller machines (ATMs). The combined net worth will stand at Rs.9.21 billion. Deposits of the new entity will stand at Rs.166.65 billion, while advances will work out to Rs.79.04 billion, the daily said.

The announcement of the merger comes on the heels of a merger between two other banking majors - ICICI Bank and Bank of Madura - that came together last month.

The merger of ICICI Bank-Bank of Madura, which takes effect from February, was expected to create the largest private bank in terms of the number of branches but the merger announcement of UTI Bank with GTB changed the game.

The merger process of private banks was kicked off last year by the HDFC Bank when it acquired Times Bank, to lead the combined assets tally.

Industry analysts say that the recent trend of mergers signals an urge among private players to consolidate their operations for increasing their customer base and to acquire a larger market share.

"The move will also help the tech-savvy private banks to compete with public sector banks who have an extensive branch network and customer base in different parts of the country," a banking analyst said. At present, about 80 percent of banking activities are in the public sector and are controlled by 27 state-run banks.