NEW DELHI: The boards of HDFC Bank and HDFC, in meetings on Friday, approved July 1 as the effective date of merger and set July 13 as the record date for allotting shares of HDFC Bank to the shareholders of the mortgage lender.
The boards of HDFC Bank and HDFC on Friday held meetings to approve the merger of the two entities. Ahead of the mega-merger, Deepak Parekh, chairman, HDFC announced his retirement on Friday morning in a letter to the shareholders.
Founded in 1977 by HT Parekh, the HDFC rose to become the biggest mortgage lender in India while HDFC Bank, which was set up in 1995, was the second largest private lender in the country.
The merger of HDFC Bank and HDFC will catapult the new entity into the league of global banking giants. The new entity will become the world’s fourth-largest bank in terms of equity market capitalisation.
The market capitalisation of HDFC Bank will rise to $172 billion. Currently, JPMorgan Chase is the largest bank in the world at $417 billion followed by ICBC- Industrial and Commercial Bank of China ($228.3 billion) and Bank of America ($227.7 billion).
In April 2022, HDFC Bank announced to take over the country’s largest mortgage lender HDFC in a deal valued at about $40 billion. After the merger, HDFC Bank will remain the second-largest bank in India with a balance sheet of Rs18 lakh crore, but it will be twice the size of its rival ICICI Bank. The merger will benefit the new entity by increasing its customer and asset base. The new HDFC Bank will have around 12 crore customers, which is greater than the population of Germany. Its branch network will grow to over 8,300 while the strength of its workforce will be over 177,000 employees.
In his letter, Deepak Parekh termed his address as the last communication to shareholders. “It is my time to hang my boots with both anticipations and hopes for the future. While this will be my last communication to shareholders of HDFC, rest assured we now stride tall into a very exciting future of growth and prosperity,” he said. “The HDFC experience is invaluable. Our history cannot be erased and our legacy will be taken forward,” he said.
On work culture at the merged entity, Parekh said that it would be best of both organisations. “The work culture will be an amalgamation of the best of both organisations,” he added. The merger will offer huge potential of cross-selling of home loans to existing HDFC Bank customers. The new HDFC Bank will be able to offer in-house home loan products to its clients, as only 2 percent of them currently possess mortgage products from HDFC.
