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The Boards of mortgage major Housing Development Finance Corporation (HDFC Ltd) and the country’s largest private sector lender HDFC Bank Friday approved July 1 as the effective date of their merger.
The merger of the HDFC twins was announced in April last year. “The Boards of both the companies at their respective meetings held today noted that the merger would be effective from July 1, 2023,” HDFC Bank said in a statement.
The combined entity with a market capitalisation of Rs 14.37 lakh crore is likely to benefit both the shareholders and customers at a time when the Indian economy is making steady growth.
“This is a defining event in our journey and I’m confident that our combined strength will enable us to create a holistic ecosystem of financial services. We’re truly happy to welcome the talented team of HDFC Ltd into the HDFC Bank family. I believe our journey will be defined by agility, adaptability, and a relentless pursuit of excellence,” said Sashi Jagdishan, CEO and Managing Director, HDFC Bank.
The boards of HDFC twins have fixed the ‘Record Date’ for determining the shareholders of HDFC Ltd who would be allotted the shares of HDFC Bank as per the share exchange ratio as July 13.
“As per the merger scheme, HDFC Bank will issue and allot to eligible shareholders 42 new equity shares of the face value of Re. 1 each, credited as fully paid-up, for every 25 equity shares of the face value of Rs 2 each fully paid-up held by such shareholder in HDFC Ltd as on the Record Date of July 13, 2023,” the release said.
After the amalgamation, HDFC Bank will be completely owned by public shareholders and existing shareholders of HDFC Ltd will own a 41 per cent stake in the bank. The foreign stake is around 8 per cent in the bank and is likely to increase.
The bank said the larger net-worth would allow greater flow of credit into the economy. It will also enable underwriting of larger ticket loans, including infrastructure loans and contribute further to nation building and employment generation.
HDFC Bank has over 6,300 branches globally and 18,000 ATMs. HDFC Ltd has 464 offices across India.
All employees of HDFC Ltd as on effective date would become HDFC Bank employees, the release said.
With this merger, HDFC Bank gets an unparalleled advantage through the mortgage portfolio providing it a quantum leap in distribution to semi urban and rural areas with a huge opportunity to cross sell bank products to a very sticky client base. Competition is expected to heat up in the banking segment, especially between HDFC Bank and State Bank of India, the largest Indian bank. The home loan segment has become attractive as non-performing assets are minimal.
Post merger, the key HDFC Bank subsidiaries include HDFC Securities Ltd., HDB Financial Services Ltd., HDFC Asset Management Co. Ltd, HDFC ERGO General Insurance Co. Ltd., HDFC Capital Advisors Ltd. and HDFC Life Insurance Co. Ltd.
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