- Date : 30/06/2023
- Read: 3 mins
With the HDFC-HDFC Bank merger nearing completion, here’s what customers and investors must know about the new entity emerging out of the merger.
- The HDFC-HDFC Bank merger has been impending for over a year
- The new entity will be a global financial giant with a massive market cap and asset base
- HDFC will cease to exist in the exchanges as shareholders will get HDFC Bank shares
- Customers may expect more cross-sell attempts and competitively priced in-house products
When the top private bank in the country and one of the most prominent housing financiers decide to join hands, a financial behemoth is bound to be created. The merger of HDFC and HDFC Bank has been in the making for over a year since the announcement in April last year.
Also Read: Creating Financial Powerhouse: HDFC And HDFC Bank Join Forces In Mega-Merger
Post-Merger Standing
However, the merger story is back in the news with reports that it will be completed by 1 July 2023. With the merger completed, the new entity become the fourth largest lender in the world, in terms of market capitalisation. Only JP Morgan Chase, Industrial and Commercial Bank of China, and Bank of America have a higher market capitalisation. As per March 2023 numbers, the merged lender will have a loan book of Rs 7.3 lakh. This is Rs 0.9 lakh crore more than the present Indian market leader, State Bank of India.
The Merger Snapshots
HDFC Chairman Deepak Parekh confirmed that all regulatory approvals required for the merger has been received. The board of the two entities meets on 30 June 2023. It will mark the last-ever meeting of HDFC Limited.
HDFC shares will be delisted on 13 July 2023. The merged stock will be traded as HDFC Bank shares from 17 July 2023. 25 shares of HDFC will convert into 42 shares of HDFC Bank. This is a ratio of 1.68:1. This will mean that HDFC shareholders will own 41% of the new entity. The new entity’s combined asset value will be Rs 18 lakh crore.
The merging entities have informed the exchanges that the dates are tentative and depend on the completion of certain last-minute formalities.
Also Read: HDFC-HDFC Bank Merger: The Big Move That Could Save You Thousands On Your Home Loan
Impact on Borrowers and Depositors
Depositors and borrowers will be able to buy all the products of the new entity from HDFC Bank branches, as well as the 445 HDFC Limited offices. The new entity will be in a better position to cross-sell products. The customers can expect more competitive products, given the low-cost funding base.
Notably, only 2% of the existing HDFC Bank customers have housing loans from HDFC Limited. The bank will have a wider playing field to cross-sell its housing finance products.
Also Read:HDFC-HDFC Bank Merger: How Will It Impact Your Mutual Fund Investments?
Final Words
Contrary to its domestic competitors, HDFC Bank has seen a consistent rise in its deposit growth. This merger can be an opportunity for the bank to reach out to more borrowers as well. However, mergers have their own challenges as well. It will be interesting to watch how the corporate culture of the two assimilates in the days ahead.
