The merger of HDFC Bank and HDFC will lead to the creation of one of the most valuable banks in the world. The merged bank entity will be ranked fourth in equity market capitalisation in the world, according to a Bloomberg report.
Valued at $172 billion, the merged entity will be the fourth biggest bank in the world after JPMorgan Chase, Industrial and Commercial Bank of China, and Bank of America, according to the report.
The HDFC-HDFC Bank merger will be effective from July 1. The boards of HDFC and HDFC Bank will meet on June 30 post to clear and approve the merger.
The merger of the corporation with HDFC Bank will be effective July 1, Parekh said.
Termed as the biggest transaction in India’s corporate history, HDFC Bank on April 4 last year agreed to take over the biggest domestic mortgage lender in a deal valued at about USD 40 billion, creating a financial services titan.
The proposed entity will have a combined asset base of around Rs 18 lakh crore. The new entity will also have around 120 million customers, which is greater than the population of Germany. It will also increase its branch network to over 8,300 and boast of total headcount of over 1,77,000 employees.
Once the deal is effective, HDFC Bank will be 100 per cent owned by public shareholders, and existing shareholders of HDFC will own 41 per cent of the bank.
Every HDFC shareholder will get 42 shares of HDFC Bank for every 25 shares they hold.
“Worldwide there are very few banks, which can at this scale and size, still aspire to double over a period of four years,” Suresh Ganapathy, head of financial services research for India at Macquarie Group Ltd.’s brokerage unit, told Bloomberg TV in an interview.
He said the bank is expected to grow at 18 per cent to 20 per cent, there is good visibility in earnings growth, and they plan to double their branches in the next four years. “HDFC Bank will remain a pretty formidable institution.”
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