Pic courtesy Trade Brains
New Delhi: As HDFC Bank took over its parent, housing finance major HDFC, on Saturday, it catapulted India to great heights by becoming the world’s fourth largest in equity market capitalisation.
HDFC Bank’s valuation of around $172 billion will place it behind just three giants — JPMorgan Chase & Co., Industrial and Commercial Bank of China Ltd. and Bank of America Corp. — according to data compiled by Bloomberg.
As a result of the ‘reverse merger’, an Indian company will rank among the world’s most valuable banks for the first time ever.
HDFC, the country’s first home finance company, will cease to exist following the biggest transaction in the history of India Inc.
It was in April 2022 that HDFC Bank agreed to take over its parent, the largest pure-play mortgage lender, in a $40-billion all-stock deal.
HDFC Bank will leave major banks like HSBC Holdings Plc and Citigroup Inc in its wake. HDFC Bank will also surge ahead of Indian peers State Bank of India (SBI) and ICICI Bank, which had market capitalisations of around $62 billion and $79 billion, respectively, as of June 22.
To gauge the magnitude of the deal, it’s suffice to point out that the new HDFC Bank entity will have more customers (around 120 million) than the population of Germany.
The branch network will go up to over 8,300 with number of employees surpassing 1,77,000.
The combined shares of HDFC twins will have the highest weighting on indices at close to 14% — compared to the current 10.4% weightage of Reliance Industries.
The mega merger will also transform 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.
According to a presentation when the merger was announced, the lender will offer in-house home loan products to its clients as only 2% of them had a mortgage product from HDFC Ltd.
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 will be the key HDFC Bank subsidiaries after the merger.
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