HDFC Bank - HDFC Merger: All You Need To Know
Deal size to why Deepak Parekh won't sit on the HDFC Bank board: 5 points to know about the mega HDFC Bank - HDFC merger
After years of speculation, HDFC Ltd., India's largest mortgage financier, will merge into HDFC Bank Ltd., the bank it fostered, also India's largest private sector bank.
It's a two-step merger that could take 12-14 months and several regulatory approvals to close.
This is a merger of equals, said Deepak Parekh, chairman of HDFC. "Over the last few years, various regulations for banks and NBFCs have been harmonised, thereby enabling the potential merger," he said.
The management of HDFC Bank will continue to run the combined entity and Sashidhar Jagdishan will remain the chief executive. Keki Mistry, who is currently vice chairman of HDFC, will stay in his role until the merger is complete.
For a quick glimpse of the deal highlights click here.
1. Deal Size
The merger will create an behemoth with a combined balance sheet of Rs 17.87 lakh crore and a net worth of Rs 3.3 lakh crore.
HDFC Bank will be twice the size of ICICI Bank once the merger is done.
The deal in charts here.
HDFC Bank + HDFC — A Formidable #2
2. Opportunities, Hurdles
70% of HDFC customers do not bank with HDFC Bank. The merger will offer significant cross-selling opportunities, said Keki Mistry, vice chairman of HDFC.
Keki Mistry on how both entities benefit.
SLR and CRR requirements should not be a drag. I think both institutions have enough excesses, which could qualify for that, said Sashidhar Jagdishan, chief executive and managing director of HDFC Bank.
Why Jagdishan says, "elephants can dance as well".
The management of HDFC Bank and HDFC Ltd at a press conference announcing the merger.
3. Merger Implications
The merger is likely to have major implication for the financials sector as it increases competitive intensity, said a Macquarie report.
Read all the analysts' views here.
4. Branches, Employees...
Once the merger is effective, all HDFC branches will be retained and mortgages will continue to be offered from these outlets.
What about employees? Read this.
5. The Deepak Parekh Era
"As the son grows older he acquires the father's business, that's all happening here," said Deepak Parekh while explaining the merger.
He also pointed out that he will not be able to join the bank board, marking an end to a storied journey of building India's leading financial services group.
"After 45 years of housing finance... After 9 million homes provided to Indians... We have to find a home for ourselves. And we have found it within the family and in our own bank."
Why Deepak Parekh won't join the HDFC Bank board.