Private lender HDFC Bank said it has received no adverse observations from the stock exchanges about its proposed merger with parent entity Housing Development Finance Corporation (HDFC) Ltd.
“We would like to inform you that HDFC Bank has received an observation letter with ‘no adverse observations’ from BSE Limited and an observation letter with ‘no objection’ from the National Stock Exchange of India Limited, both dated July 2, 2022,” it said in a regulatory filing.
“The Scheme remains subject to various statutory and regulatory approvals inter alia including approvals from the Reserve Bank of India, Competition Commission of India, the National Company Law Tribunal and the respective shareholders and creditors of the companies involved in the Scheme, as may be required,” HDFC and HDFC Bank said in a statement.
The observation letters, dated July 2, 2022, are valid for six months, within which the ‘scheme’ is to be submitted to the National Company Law Tribunal (NCLT).
On April 4, the boards of both HDFC and HDFC Bank approved a scheme of amalgamation, subject to requisite approvals.
The proposed entity will have a combined asset base of around Rs 18 lakh crore. The merger is expected to be completed by the second or third quarter of FY24, subject to regulatory approvals.
Once the deal is effective, HDFC Bank will be 100 percent owned by public shareholders, and existing shareholders of HDFC will own 41 percent of the bank.
Every HDFC shareholder will get 42 shares of HDFC Bank for every 25 shares held.
What Happens Next?
After the merger, HDFC Bank will be 100 percent owned by public shareholders, while existing shareholders of HDFC will own 41 percent of HDFC Bank. The subsidiaries and associates of HDFC will shift to HDFC Bank.
DFC Chairman Deepak Parekh, while announcing the plan, had called it a “merger of equals” and attributed tight RBI regulations on non-banking finance companies (NBFCs) as a major reason for the merger.
Post the merger, there will be a combined customer base of HDFC Bank and HDFC and they will be offered several financial products—savings accounts, mortgages or home loans, life insurance, general insurance, health insurance, credit cards, investment products, and personal loans.
HDFC and HDFC Bank merger has been in the news for a while. Back in 2015, Parekh had said his firm could consider a merger with HDFC Bank provided circumstances were in favor.
Following the merger, the combined balance sheet will be Rs 17.87 lakh crore and the net worth will be Rs 3.3 lakh crore, as of December 2021 balance sheet.
As of April 1, 2022, the market capitalization of HDFC Bank was Rs 8.36 lakh crore (USD 110 billion), and that of HDFC was Rs 4.46 lakh crore (USD 59 billion).
Post-merger HDFC Bank will be twice the size of ICICI Bank, which is the third-largest bank now.
