HDFC-HDFC Bank Merger: New Entity Set To Become World's Fourth-Largest Bank

HDFC and HDFC Bank have announced their merger, forming a new entity that is set to become the world's fourth-largest bank, Bloomberg reported.

The merged entity resulting from the HDFC-HDFC Bank merger is projected to have a valuation of $172 billion, positioning it as the world's fourth-largest bank, trailing only JPMorgan Chase, Industrial and Commercial Bank of China, and Bank of America, as per the report's findings.

The merger is set to come into effect on July 1, following the board meetings of HDFC and HDFC Bank on June 30, where final approval and clearance for the merger will be sought. HDFC Bank's CEO, Mr. Parekh, confirmed that the merger with the corporation will be operational from July 1.

The proposed merged entity is set to have a formidable combined asset base of approximately Rs 18 lakh crore, reflecting its substantial financial strength and influence. With an extensive customer base of approximately 120 million, surpassing the population of Germany, the new entity is set to become a formidable force in the financial sector. Moreover, the merger will substantially expand its branch network to over 8,300 and its workforce to more than 1,77,000 employees.

HDFC Bank agreed to purchase the largest domestic mortgage lender on April 4 of last year in a deal estimated to be worth approximately USD 40 billion, creating a financial services juggernaut in what was termed as the largest transaction in India's corporate history.

Existing HDFC shareholders will control 41% of the bank after the arrangement is in place, with the general public holding the remaining 100%. Each shareholder will receive 42 HDFC Bank shares for every 25 HDFC shares they currently own.

"Worldwide there are very few banks, which can at this scale and size, still aspire to double over a period of four years," Suresh Ganapathy, head of financial services research for India at Macquarie Group Ltd. 's brokerage unit, told Bloomberg TV in an interview.

He claimed that over the next four years, they intend to double the number of their branches and forecast an increase in earnings of 18 to 20 percent for the bank. HDFC Bank will still be a very strong organisation.