HDFC surges ahead of banks including HSBC Holdings Plc and Citigroup Inc. (file)
In what is being called the biggest transaction in the history of India Inc, HDFC Bank will take over its parent, housing finance major HDFC, on Saturday. Following the reverse merger, the country's first home finance company, would cease to exist.
Here's your 10-point cheatsheet to this big story:
An Indian company will for the first time rank among the world's most valuable banks after completing the merger, marking a new challenger to the largest American and Chinese lenders occupying the coveted top spots, Bloomberg reported.
HDFC Bank on April 4, 2022, agreed to take over its parent, which is the largest pure-play mortgage lender, in a $40-billion all-stock deal, creating a financial services titan with a combined asset of over Rs 18 lakh crore.
The new HDFC Bank entity will have around 120 million customers - that's greater than the population of Germany. It'll also increase its branch network to over 8,300 and boast of a total headcount of more than 1,77,000 employees.
The tie-up of HDFC Bank Ltd. and Housing Development Finance Corp. creates a lender that ranks fourth in equity market capitalisation, behind JPMorgan Chase & Co., Industrial and Commercial Bank of China Ltd., and Bank of America Corp., according to data compiled by Bloomberg. It's valued at about $172 billion.
The total business of the merged entity stood at Rs 41 lakh crore at the end of March 2023. With the merger, the net worth of the entity would be over Rs 4.14 lakh crore. The combined profit of both entities was to the tune of about Rs 60,000 crore at the end of March 2023. It will have combined asset of over Rs 18 lakh crore.
The combined shares of the HDFC twins will have the highest weighting on the indices at close to 14 per cent, much higher than the present index heavyweight Reliance Industries with a 10.4 per cent weightage.
HDFC surges ahead of banks including HSBC Holdings Plc and Citigroup Inc. The bank will also leave behind its Indian peers State Bank of India and ICICI Bank, with market capitalisations of about $62 billion and $79 billion, respectively, as of June 22.
It also marks the transformation of HDFC Bank into a financial services conglomerate that offers a full suite 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 clients as only 2% of them had a mortgage product from HDFC Ltd., according to a presentation when the merger was announced.
Post-merger, the key HDFC Bank subsidiaries include 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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