Centurion Bank of Punjab's board gave an in-principle approval for merger with HDFC Bank, official sources said.
MUMBAI: India's second largest private sector lender HDFC Bank and the fourth largest Centurion Bank of Punjab on Saturday agreed, in principle, to merge to create the country's largest private sector financial institution in terms of branch network.
"The two boards have resolved to pursue the merger, subject to satisfactory due diligence, a fair share-swap ratio and all the requisite statutory, regulatory and corporate approvals, including those from the RBI, the stock exchanges, and the respective boards and shareholders of both banks," said a joint statement by the two banks.
The boards of both banks will now meet on February 25 to consider the swap ratio after receiving the valuation reports, the statement said.
A decision with regard to the draft scheme of amalgamation and any other matters as required would be taken on February 28, it said.
With the merger, the combined branch network would go up to 1,348 against the existing private sector leader ICICI Bank's close to 955 branches.
Country's second largest lender HDFC Bank has about 754 branches while CBoP is having 394 branches across 180 locations.
However in terms of assets, ICICI Bank is much larger than the proposed new entity. While ICICI Bank has assets of Rs 3,76,700 crore, the proposed combined entity would have over Rs 1,10,000 crore.
Entering the bank's premises in central Mumbai to attend the meeting, HDFC Chairman Deepak Parekh said that if the Board approved the merger proposal, then another meet would be called on Monday at 7:30 am.
The share swap ratio would be decided at that meeting, Parekh said.
CBoP which had its board meeting in New Delhi also gave an in-principle approval to the merger proposal.
HDFC Bank has a promoter holding of 23.28 per cent, held jointly by HDFC Ltd, HDFC Investments and HDFC Holdings.
The bank has 26.57 per cent FII holding, while local mutual funds and insurance firms own 3.39 per cent and 2.81 per cent respectively.
The bank has 1.08 per cent held by central/state governments, according to shareholding pattern as on December 31, 2007, as filed with the bourses.
Shares of HDFC Bank on Friday closed down 4.4 per cent at Rs 1,474.95 on the Bombay Stock Exchange, while CBoP's scrip closed at Rs 56.40, a fall of 1.14 per cent from the previous close.
Centurion Bank of Punjab, the fourth largest private sector lender, is promoted by Bank of Muscat, HSBC Finance and Sabre Capital. Bank of Muscat holds the maximum equity of 14 per cent in the bank.
Rana Talwar promoted Sabre Capital holds about 3.4 per cent stake in the bank.
Following inorganic route of growth, Centurion Bank had in the past acquired Bank of Punjab and Lord Krishna Bank.
HDFC Bank had earlier acquired the Times Bank.
The combined entity could have a market capitalization of about Rs 63,000 crore, based on their current market values.
While HDFC Bank is the third most valued bank in India with a market cap of over Rs 52,000 crore, CBoP is the tenth most valued bank with a market cap of about Rs 10,500 crore.
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
)
){kind=small}
){kind=small}
)
)
)
)
)
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}