hdfc bank: Mortgage lender HDFC announces merger with HDFC bank

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Mortgage lender HDFC announced on Monday that it would merge with HDFC Bank, with a stock merger ratio of 42 shares of HDFC Bank to 25 shares of HDFC. The proposed transaction will allow HDFC Bank to expand its housing loan portfolio and enhance its existing customer base. After this proposed merger, HDFC will hold 41% of the transaction in the bank.

The merger is subject to regulatory approvals from the RBI and other regulatory authorities.

To date, HDFC has total assets of Rs 6.23 lakh crore while HDFC Bank has assets worth Rs 19.38 lakh crore.

According to an exchange filing, the proposed transaction will help leverage and create significant value for various stakeholders. It should also benefit from increased scale, a comprehensive product offering, balance sheet resilience and the ability to generate synergies between revenue opportunities, operational efficiencies and underwriting efficiencies.

HDFC Bank has a large customer base of 6.8 crores and a well-diversified low-cost funding base to grow the long-term loan portfolio.

“A combination of the Company and HDFC Bank is fully complementary and enhances HDFC Bank’s value proposition,” HDFC said in a regulatory filing. “HDFC Bank would benefit from a larger balance sheet and net worth, which would allow for larger loans to be underwritten and also allow for a greater flow of credit into the Indian economy.”

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