HDFC moves ahead of banks including HSBC Holdings Plc and Citigroup Inc. (file)
New Delhi:
In what has been dubbed the largest transaction in India Inc’s history, HDFC Bank will acquire its parent company, housing finance giant HDFC, on Saturday. After the reverse merger, the nation’s first home finance company would cease to exist.
Here’s your 10-point cheat sheet for this big story:
An Indian company will rank among the world’s most valuable banks for the first time upon completion of the merger, marking a new challenger to the largest US and Chinese lenders occupying coveted top positions, Bloomberg reported.
HDFC Bank agreed on April 4, 2022 to acquire its parent company, the largest pure-play mortgage lender, in a $40 billion all-stock deal, creating a financial services giant with a combined net worth of more than Rs 18 lakh crore.
The new HDFC Bank entity will have approximately 120 million customers – that’s more than the population of Germany. It will also expand its branch network to more than 8,300 and boast a total workforce of more than 1,77,000 employees.
The merger of HDFC Bank Ltd. and Housing Development Finance Corp. creates a lender ranked fourth by market capitalization, behind JPMorgan Chase & Co., Industrial and Commercial Bank of China Ltd. and Bank of America Corp., according to data collected by Bloomberg. It is estimated at about $172 billion.
The total revenue of the merged entity was Rs 41 lakh crore at the end of March 2023. With the merger, the net worth of the entity would exceed Rs 4.14 lakh crore. The combined profit of both entities was about Rs 60,000 crore at the end of March 2023. It will have a combined net worth of more than Rs 18 lakh crore.
The combined stocks of the HDFC twins will have the highest weighting in the indices at nearly 14 percent, much higher than the index’s current heavyweight, Reliance Industries, at 10.4 percent.
HDFC moves ahead of banks including HSBC Holdings Plc and Citigroup Inc. The bank will also outshine its Indian counterparts State Bank of India and ICICI Bank, with market caps of approximately $62 billion and $79 billion respectively as of June 22.
It also marks the transformation of HDFC Bank into a financial services conglomerate offering a full range of financial services from banking to insurance and mutual funds through its subsidiaries, the bank said.
The lender will be able to offer in-house home loan products to its customers as only 2% of them have a mortgage product from HDFC Ltd. had, according to a presentation when the merger was announced.
Following the merger, HDFC Bank’s principal subsidiaries are 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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