HDFC's merger propels it to become one of the world's most valuable banks
The upcoming HDFC Bank merger will boast a customer base of approximately 120 million, surpassing the population of Germany.
Jul 1, 2023, 12:08 IST
New Delhi: In a historic development, HDFC Bank is set to acquire its parent company, housing finance major HDFC, in what is being hailed as the largest transaction in the history of India Inc. Here's a summarized breakdown of this significant event:
1. A milestone for India: HDFC Bank's merger will make it the first Indian company to rank among the world's most valuable banks, challenging the top positions held by major American and Chinese lenders, according to Bloomberg.
2. Massive deal: The merger involves an all-stock transaction worth $40 billion, uniting HDFC Bank, a leading mortgage lender, with HDFC, resulting in a financial powerhouse with combined assets exceeding ₹18 lakh crore.
3. Expanding customer base: The new HDFC Bank entity will enjoy a customer base of approximately 120 million, surpassing even the population of Germany. Additionally, it will expand its branch network to over 8,300 and have more than 177,000 employees.
4. Impressive market capitalization: Following the merger, HDFC Bank and Housing Development Finance Corp. will hold the fourth-highest equity market capitalization worldwide, trailing only JPMorgan Chase & Co., Industrial and Commercial Bank of China Ltd., and Bank of America Corp., with an estimated value of $172 billion.
5. Solid financials: The combined business of the merged entity amounted to ₹41 lakh crore by March 2023. The net worth of the new entity is expected to exceed ₹4.14 lakh crore, with a combined profit of approximately ₹60,000 crore.
6. Dominance in indices: The combined shares of HDFC Bank and HDFC will have a substantial weighting on the indices, constituting close to 14%, surpassing the present heavyweight Reliance Industries, which holds a weightage of 10.4%.
7. Surpassing international and domestic peers: HDFC Bank's market capitalization will exceed that of global banks like HSBC Holdings Plc and Citigroup Inc. It will also outshine its Indian counterparts, including State Bank of India and ICICI Bank, in terms of market value.
8. Diversification into financial services: The merger signifies the transformation of HDFC Bank into a comprehensive financial services conglomerate, offering a wide range of services, such as banking, insurance, and mutual funds, through its subsidiaries.
9. Strengthening home loan offerings: Post-merger, HDFC Bank will be able to provide in-house home loan products to its clients, as a significant percentage of them currently rely on mortgage products from HDFC Ltd.
10. Key subsidiaries: The notable subsidiaries of HDFC Bank post-merger 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.
1. A milestone for India: HDFC Bank's merger will make it the first Indian company to rank among the world's most valuable banks, challenging the top positions held by major American and Chinese lenders, according to Bloomberg.
2. Massive deal: The merger involves an all-stock transaction worth $40 billion, uniting HDFC Bank, a leading mortgage lender, with HDFC, resulting in a financial powerhouse with combined assets exceeding ₹18 lakh crore.
3. Expanding customer base: The new HDFC Bank entity will enjoy a customer base of approximately 120 million, surpassing even the population of Germany. Additionally, it will expand its branch network to over 8,300 and have more than 177,000 employees.
4. Impressive market capitalization: Following the merger, HDFC Bank and Housing Development Finance Corp. will hold the fourth-highest equity market capitalization worldwide, trailing only JPMorgan Chase & Co., Industrial and Commercial Bank of China Ltd., and Bank of America Corp., with an estimated value of $172 billion.
5. Solid financials: The combined business of the merged entity amounted to ₹41 lakh crore by March 2023. The net worth of the new entity is expected to exceed ₹4.14 lakh crore, with a combined profit of approximately ₹60,000 crore.
6. Dominance in indices: The combined shares of HDFC Bank and HDFC will have a substantial weighting on the indices, constituting close to 14%, surpassing the present heavyweight Reliance Industries, which holds a weightage of 10.4%.
7. Surpassing international and domestic peers: HDFC Bank's market capitalization will exceed that of global banks like HSBC Holdings Plc and Citigroup Inc. It will also outshine its Indian counterparts, including State Bank of India and ICICI Bank, in terms of market value.
8. Diversification into financial services: The merger signifies the transformation of HDFC Bank into a comprehensive financial services conglomerate, offering a wide range of services, such as banking, insurance, and mutual funds, through its subsidiaries.
9. Strengthening home loan offerings: Post-merger, HDFC Bank will be able to provide in-house home loan products to its clients, as a significant percentage of them currently rely on mortgage products from HDFC Ltd.
10. Key subsidiaries: The notable subsidiaries of HDFC Bank post-merger 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.