HDFC Bank-HDFC merger to be effective from July 1: All you need to know

HDFC-HDFC Bank merger: The merger of housing finance major HDFC with the country's largest private lender HDFC Bank will be effective from July 1, HDFC Chairman Deepak Parekh said on Tuesday.

HDFC-HDFC Bank merger: Every HDFC shareholder will get 42 shares of HDFC Bank for every 25 shares they hold. Image Courtesy: Reuters.

HDFC-HDFC Bank merger: The merger of HDFC and HDFC Bank will be effective from July 1 after the board meeting of HDFC and HDFC Bank that will be held on June 30. HDFC Ltd shares will stop trading from July 13 and all branches of HDFC Bank will gradually start selling mortgage loans thereafter.

HDFC-HDFC Bank: Ratio of shares post-merger

Once the merger is completed on July 1, HDFC Ltd shareholders will hold 41% in HDFC Bank. The bank will maintain Swap Ratio of 25:42, so for every 25 shares of HDFC Ltd, 42 shares of HDFC Bank will be given. As per the estimates of the analysts, the size of the balance sheet of the merged entity will be more than Rs 18 lakh crores and it is likely to generate a profit of around Rs 50,000 crores.

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HDFC-HDFC Bank Merger: A Look at their loan books

As per the analysts, HDFC Bank will become the second largest bank after SBI in terms of credit after the merger is complete. For the merged entity, mortgage will comprise of more than 30 per cent, loans from commercial and rural banking will be around 25 per cent and more than 20 per cent from retail, with corporate loan book and others contributing 20 per cent and 5 per cent.

HDFC-HDFC Bank merger: Benefits for customers

HDFC Bank will be able to sell HDFC housing products at a better price. Alongside, there will be a spike private sector investment after the merger, thus asset formation will take place, and borrowers will build more assets.

Also Read: HDFC-HDFC Bank merger: LTIMindtree can enter Nifty50 in place of HDFC Ltd

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