HDFC Bank will become the world’s fifth largest lender, complete process in 18 months
The merger between HDFC Ltd and HDFC Bank was announced on Monday. The merger was approved about eight years ago. According to a report, this process will be completed in 18 months and after this HDFC Bank will become the fifth largest lender in the world.
On Monday, the two giants of the country, HDFC Bank and HDFC Limited, were announced to be one. It is one of the biggest deals in the Indian financial sector. information about this merger was provided to the stock market. According to the report, some regulatory approvals are yet to be received in this matter, after which the deal will be completed in the next 18 months and after that a new company will be formed. With this, HDFC Bank will build a larger housing loan portfolio as well as increase its customer base. After this deal, HDFC Ltd will have 41 per cent stake in the bank. After the merger, the balance sheet of the new company will be Rs 17.87 lakh crore.
Second in terms of market cap
After the merger, the public will have 100% stake in HDFC Bank. The total assets of HDFC Ltd are Rs 6.23 lakh crore while that of HDFC Bank is Rs 19.38 lakh crore. HDFC Bank has 68 million customers. With the merger of the two companies, their market capitalization has become the highest after Reliance. The market capitalization of HDFC Limited is Rs 4.8 Lakh Crore and that of HDFC Bank is Rs 9.18 Lakh Crore. In this way, the market capitalization of both of them stood at Rs 13.98 lakh crore, while the market capitalization of TCS, which is currently second only to Reliance, is Rs 13.79 lakh crore.
There will be no effect on the employees
After the merger, 42 shares of HDFC Bank will be given for every 25 shares of HDFC Ltd. According to experts, the number of customers of HDFC Bank will increase after the merger. Because, about 70 percent of HDFC Limited’s customers are those who do not have an account with HDFC Bank. On the other hand, if 80 percent of HDFC Bank customers take a loan from another bank, then the bank will also get a benefit from it. HDFC Chairman Deepak Parekh said that after this merger, the balance sheet of the new company will increase as well as the number of home loan borrowers will also increase. He said that the stake in HDFC Life can be increased to 50 per cent, which is 48 per cent at present. No employee will be affected by this merger. “The merger is a coming together of equals,” Parekh said
Biggest merger in corporate history
After the merger of HDFC with HDFC Bank, its balance sheet will be double that of ICICI Bank. Rating agency S&P said in its report that this is the biggest merger in India’s corporate history. After this, HDFC Bank’s loan will increase by 42 percent to Rs 18 lakh crore and this will increase the bank’s market share from 11 to 15 percent.However, even after the merger, HDFC Bank will remain the second largest bank. SBI’s name is on the first number and ICICI Bank will be on the third number. Its merger will take at least 12 to 18 months for which IRDAI, Reserve Bank and other regulatory approvals will have to be taken. With this merger, the bank will be able to raise money at a better rate. Along with this, the digital and distribution network will also increase.
Got approval eight years ago
About 8 years ago, a notification from the Reserve Bank led to the merger of HDFC. At that time, the Reserve Bank had approved that banks could issue long-term bonds for affordable housing. The executives of both the companies had ruled out the possibility of any such merger. In July 2014, the Reserve Bank had said that there is no need for the bank to maintain the cash reserve ratio. Both the companies are doing separate business since 1994. HDFC Bank started operations in 1994 and from then till 2020, its MD was the CEO Aditya Puri. He holds the record of being MD & CEO for the longest time in Indian banking history. HDFC Bank used to give all the files of the home loan to HDFC Limited and get commission on it.
Following the announcement by HDFC chairman Deepak Parekh, HDFC Bank shares shot up by 9.97 per cent to Rs 1,656.45 on the BSE Monday. HDFC Ltd shares rose by 9.30 per cent to close at 2,678.90.
