HDFC Bank
Both businesses notified the stock exchanges late on Friday that the boards of directors of HDFC and HDFC Bank had approved the merger of the two with effect from July 1, 2023. After the merger, HDFC Bank will have a market capitalization of Rs 14.73 trillion, or around $180 billion, making it the fourth-largest bank in the world.
Shares of HDFC Bank will be distributed to HDFC shareholder on July 13; HDFC shares won’t be exchanged.
This is a turning point in our path, and I have faith that our strength as a team will help us build a comprehensive ecosystem of financial services. According to Sashidhar Jagdishan, MD & CEO of HDFC Bank, “I think that our journey will be characterised by agility, adaptability, and a relentless pursuit of excellence.” He declared, “We will view obstacles as learning opportunities, draw from our past, and work to be the standard of success and honesty in the financial services business.
Ahead of the effective date of the merger, HDFC Holdings and HDFC Investments were amalgamated into HDFC. After the merger, key HDFC Bank subsidiaries will include HDFC Securities, HDB Financial Services, HDFC Asset Management, HDFC ERGO General Insurance, HDFC Capital Advisors, and HDFC Life Insurance.
According to the share swap scheme, shareholders of HDFC will receive 42 shares of HDFC Bank (each of face value of Rs 1) for 25 shares held in HDFC Limited (each of face value of Rs 2). Equity share(s) held by HDFC Limited in HDFC Bank will be extinguished, according to the scheme.
HDFC Bank will be 100 per cent owned by public shareholders and existing shareholders of HDFC will own 41 per cent of HDFC Bank. The commercial papers of HDFC will be in the name of HDFC Bank from July 7, non-convertible debentures July 12, and the warrants will be in the name of HDFC Bank starting July 13.
After the merger, HDFC Bank will have a loan book of Rs 22 trillion with 8,344 branches. The combined staff strength will be 177,239. On April 4, 2022, the entities decided to merge as the regulatory arbitrage between a bank and the non-banking financial company was narrowing. The merger was expected to be completed in 15-18 months.
HDFC Bank said the merged entity brings together significant complementarities that exist between both entities and is poised to create meaningful value for various stakeholders.
HDFC Bank asked the Reserve Bank of India for a number of regulatory exemptions when it announced the merger last year. In order to reach its lending goals for the key sectors, the RBI granted HDFC Bank permission in March to take into account a third of the outstanding HDFC loans from the year prior to the merger. Over the following two years, consideration will be given equally to the remaining two-thirds of HDFC’s portfolio.
However, the bank has not yet secured regulatory approval for additional time to achieve the statutory liquidity ratio and cash reserve ratio. Being an NBFC, HDFC is exempt from CRR/SLR requirements; however, the bank must set aside money for HDFC loans.
(This story has not been edited by Bharat Express staff and is auto-generated from a syndicated feed.)
