HDFC To Merge With HDFC Bank, Shares Zoom Nearly 10%: 10 Points

HDFC To Merge With HDFC Bank, Shares Zoom Nearly 10%: 10 Points
HDFC Bank: Shares of HDFC twins (HDFC and HDFC Bank) zoomed 9.12% and 9.83%, respectively.
  1. Post the merger, HDFC Bank will be 100 per cent owned by public shareholders and existing shareholders of HDFC Limited will own 41 per cent of HDFC Bank.
  2. As of today, HDFC Ltd, along with two of its wholly-owned subsidiaries (HDFC Investments Ltd and HDFC Holdings Ltd), holds 21 per cent of the paid-up equity share capital of HDFC Bank.
  3. With the amalgamation, HDFC Bank will be able to offer more competitive housing products and it will result in reducing the private lender's proportion of exposure to unsecured loans, the mortgage lender said.
  4. "The merger is subject to the receipt of requisite approvals from the Reserve Bank of India (RBI), Securities and Exchange Board of India (SEBI), the Competition Commission of India, the National Housing Bank (NHB), the Insurance and Regulatory and Development Authority, the Pension Fund Regulatory and Development Authority, the National Company Law Tribunal, BSE Ltd and the National Stock Exchange of India Ltd and other statutory and regulatory authorities, and the respective shareholders and creditors," HDFC stated.
  5. Deepak Parekh, HDFC Chairman, said, "This is a merger of equals. We believe that the housing finance business is poised to grow in leaps and bounds due to the implementation of RERA, infrastructure status to the housing sector, government initiatives like affordable housing for all, amongst others."
  6. "Housing finance business is poised to grow. The merger will accelerate the pace of credit growth," Mr Parekh later said in a media briefing. The combined balance sheet of the merged entity will be Rs 17.87 lakh crore and net worth to be Rs 3.3 lakh crore, he added. 
  7. Impact on Employees: Mr Parekh also stated that the HDFC-HDFC Bank merger will not impact the employees of HDFC Ltd.
  8. Shares of HDFC twins (HDFC and HDFC Bank) zoomed 9.12 per cent and 9.83 per cent, respectively.
  9. Currently, HDFC has total assets of Rs 6.23 lakh crore, while HDFC Bank has assets worth Rs 19.38 lakh crore. HDFC Bank has a large customer base of 6.8 crore.
  10. Samir Bahl, CEO, Investment Banking at Anand Rathi Advisors, said, "This is India's largest and most transformational merger in the Indian financial services sector. With this merger, HDFC Bank gets an unparalleled advantage through the mortgage portfolio providing it with a quantum leap in distribution to semi-urban and rural areas with a huge opportunity to cross-sell bank products to a very very sticky client base. The combined entity will be able to extract substantial synergy benefits which abode well for all stakeholders and shareholders."
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