NEW DELHI: The merger of India’s largest private sector lender HDFC Bank and mortgage lender HDFC is expected to be completed by July 1. The boards of both corporations will meet on June 30 to clear and approve the merger.
The merger of HDFC twins will be effective July 1, HDFC Chairman Deepak Parekh told reporters on Tuesday. However, the mortgage lender clarified later in the evening that the effective date of the merger mentioned by the Chairman is tentative.
“We refer to some news reports of today referring to press interaction of the Chairman of HDFC Limited wherein inter alia the tentative effective date of the scheme as July 1, 2023, and the tentative ‘record date’ for determining the shareholders of HDFC Limited who would be allotted equity shares of HDFC Bank as per the Share Exchange Ratio, as July 13, 2023, were given,” said HDFC in a regulatory filing to the BSE.
“Please note that the above dates are tentative and are subject to completion of certain formalities including those which are beyond the control of HDFC Limited or HDFC Bank,” it added.
After the merger, HDFC Bank will remain the second-largest bank in India but it will be twice the size of its rival ICICI Bank. In April 2022, HDFC Bank announced to take over the country’s largest mortgage lender HDFC in a deal valued at about USD 40 billion. After the merger, the new brand will create a financial giant with a balance sheet of Rs 18 lakh crore.
“The branches of HDFC will continue (to operate) except the boards outside will say HDFC Bank,” said Parekh. “Every employee under the age of 60 will be absorbed and salaries will not be reduced,” he added. Parekh is set to retire from his current post on June 30 following the merger.
Small branches of the mortgage lender, which will not be able to provide all the services of HDFC Bank, will be converted into service centres of the bank, he added.
The merger will offer the huge potential of cross-selling of home loans to existing HDFC Bank customers, said Keki Mistry, Vice-Chairman and CEO, of HDFC. “HDFC bank has 70 million customers and of that, just about 2 per cent of them have taken loans from HDFC Bank and about 5 per cent have taken loans from other banks,” Keki Mistry, Vice-Chairman and CEO, HDFC told reporters.
As per the terms of the deal, shareholders of HDFC will get 42 shares of HDFC Bank for 25 shares of HDFC. The housing finance portfolio will strengthen HDFC Bank’s retail book and allow the lender to tap into a customer base that has largely remained untapped.
After the merger, HDFC Bank will be 100 per cent owned by public shareholders, and existing shareholders of HDFC will own 41 per cent of the bank.
Merger details