The merger between Housing Development Finance Corporation and HDFC Bank, effective from July 1, is being hailed as the biggest deal in the history of the Indian business world. Following this reverse merger, HDFC, the country’s leading home finance company, will cease to exist. This article presents 10 key facts related to the HDFC-HDFC Bank merger, highlighting its significance and potential impact.
HDFC-HDFC Bank to Join List of World’s Most Valuable Banks:
According to a report by Bloomberg, after the completion of the merger between Housing Development Finance Corporation and HDFC Bank, the newly formed entity will become the first Indian company to be included in the list of the world’s most valuable banks. This development poses a new challenge for the top positions dominated by the largest American and Chinese lenders.
Market Cap of HDFC to Surpass INR 18 Trillion:
On April 4, 2022, Bank agreed to merge with Housing Development Finance Corporation, the largest housing finance company in India, under a $40 billion all-stock deal. With this merger, the market capitalization of HDFC is going to exceed INR 18 trillion.
Expanded Customer Base and Branch Network:
Following the HDFC-HDFC Bank merger, the bank will have approximately 120 million customers, surpassing the population of Germany. Moreover, the bank’s branch network will expand to over 8,300 branches, and the total number of employees will exceed 177,000.
Market Capitalization Surpasses $172 Billion:
After the merger of HDFC Bank Limited and Housing Development Finance Corporation (HDFC), the market capitalization of HDFC has reached $172 billion (approximately INR 14 trillion). This positions Housing Development Finance Corporation as the fourth-largest company in terms of market capitalization, surpassing JPMorgan Chase & Co., Industrial and Commercial Bank of China Limited, and Bank of America Corp.
Total Business of INR 41 Trillion:
As of March 2023, the merged entity had a total business worth INR 41 trillion. With the merger, its net worth is about to exceed INR 4.14 trillion. The combined net profit of both entities stood at around INR 600 billion. Furthermore, their total assets will exceed INR 18 trillion.
HDFC-HDFC Bank Shares Gain Prominence:
The combined index weight of HDFC-HDFC Bank shares will be approximately 14%, surpassing the current index heavyweight, Reliance Industries, which holds a 10.4% weight.
Surpassing Other Banks:
This Bank has outpaced banks such as HSBC Holdings PLC and Citigroup Inc., reaching market capitalizations of $62 billion and $79 billion, respectively, by June 22.
Transformation of HDFC Bank’s Financial Services Group:
The merger signifies a transformation for this Bank into a financial services group, providing a complete range of financial services, from banking to insurance and mutual funds, through its subsidiary companies.
Introduction of In-House Loan Products:
As per the documents revealed during the merger announcement, this Bank will be able to offer its customers the convenience of in-house loan products, as only 2% of HDFC Limited’s mortgage loans were present.
Major Subsidiaries of HDFC Bank:
Following the merger, this Bank’s key subsidiaries include HDFC Securities Limited, HDFC Bank Financial Services Limited, HDFC Asset Management Company Limited, HDFC ERGO General Insurance Company Limited, HDFC Capital Advisors Limited, and HDFC Life Insurance Company Limited.
The merger between HDFC and HDFC Bank marks a significant milestone in the Indian business landscape. This consolidation creates a financial powerhouse with a massive customer base, an expanded branch network, and a formidable market capitalization, positioning it among the world’s top banks.
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