The reverse merger of HDFC with its subsidiary HDFC Bank effective Saturday has increased the total business of the merged entity to over Rs 41 lakh crore, closer to the country’s biggest lender SBI.
The total business (deposit and advances) of State Bank of India (SBI) stood at Rs 70.30 lakh crore at the end of March 31, 2023. However, the combined profit is higher at Rs 60,000 crore as compared to Rs 50,232 crore recorded by SBI in FY23. Post-merger, HDFC Bank became the fourth most valued lender in the world, and narrowed the gap by asset size with state-owned SBI to be the second largest Indian bank. The total business of the merged entity stood at Rs 41 lakh crore at the end of March 2023. With the merger, the networth of the entity would be over Rs 4.14 lakh crore.
Following the merger, the capital of HDFC Bank increased to Rs 1,190.61 crore with the power to increase or reduce the share capital. HDFC Investments and HDFC Holdings have been amalgamated with and into HDFC Limited, and have stood dissolved without being wound up, without any further act or deed, on July 1, 2023, HDFC Bank said in a regulatory filing. HDFC Limited has been amalgamated with and into HDFC Bank, and HDFC Limited has stood dissolved without being wound up, without any further act or deed, on July 1, 2023, with effect from Saturday, it added.
With the deal getting effective, HDFC Bank will be 100 per cent owned by public shareholders, and existing shareholders of HDFC will own 41 per cent of the bank. Every HDFC shareholder will get 42 shares of HDFC Bank for every 25 shares they hold. The board of directors of HDFC Bank in consultation with the board of directors of HDFC Limited has fixed July 13, 2023, for determining the shareholders of HDFC Ltd, who would be issued and allotted the shares of HDFC Bank. Besides, July 13 has been fixed for the continuation of warrants of HDFC Limited in the name of HDFC Bank.
The board has fixed July 12, 2023, for the transfer of non-convertible debentures while July 7 for the transfer of commercial papers of HDFC Ltd in the name of HDFC Bank. The merged entity brings together significant complementarities that exist between both entities and is poised to create meaningful value for various stakeholders, including respective customers, employees and shareholders of both entities from increased scale, comprehensive product offering, balance sheet resiliency and ability to drive synergies across revenue opportunities, operating efficiencies and underwriting efficiencies. HDFC Bank began the day one after the merger with a rebranding exercise, wherein it is putting up its colours at all the over 500 branches and offices of HDFC Ltd.
The erstwhile HDFC’s corporate headquarters at Ramon House already sports the HDFC Bank branding, and officials estimated that the entire exercise will be over in the next 24 hours. It can be noted that dedicated teams have been put in place to make the merger as seamless as possible, right since its announcement on April 4 last year. As part of the USD 40 billion all-share deal, the biggest in Indian corporate history, HDFC Bank had committed to absorb all the over 4,000 employees of its parent.