In a historic move, HDFC Bank is set to acquire its parent company, HDFC, in what is being hailed as the largest transaction in India Inc's history. This landmark reverse merger is expected to propel the Indian bank into the league of the world's most valuable financial institutions, challenging the dominance of American and Chinese giants. With a combined asset value exceeding Rs 18 lakh crore, the new HDFC Bank entity will cater to an enormous customer base of approximately 120 million people, surpassing even the population of Germany. Moreover, it will operate a vast branch network of over 8,300 locations and employ more than 177,000 individuals.
This merger positions HDFC Bank as the fourth-largest lender in terms of equity market capitalization, trailing only JPMorgan Chase & Co., Industrial and Commercial Bank of China Ltd., and Bank of America Corp. Bloomberg estimates the value of the merged entity to be around $172 billion, a testament to its formidable stature in the financial sector. As of March 2023, the merged entity had conducted business worth Rs 41 lakh crore, with a net worth exceeding Rs 4.14 lakh crore. The combined profits of HDFC Bank and HDFC stood at approximately Rs 60,000 crore during the same period.
The merger's impact extends beyond the financial figures. The combined shares of HDFC Bank and HDFC will hold significant weightage on market indices, accounting for nearly 14% compared to Reliance Industries' current 10.4% weightage. This development catapults HDFC Bank ahead of global banks like HSBC Holdings Plc and Citigroup Inc., while overshadowing its Indian counterparts, State Bank of India and ICICI Bank, in terms of market capitalization.
This transformative merger also signifies HDFC Bank's evolution into a diversified financial services conglomerate. With subsidiaries such as 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, the bank now offers a comprehensive range of financial products and services, spanning banking, insurance, and mutual funds.
One of the key advantages of this merger is HDFC Bank's enhanced ability to provide in-house home loan products to its vast customer base. Prior to the merger, only a mere 2% of the bank's clients held mortgage products from HDFC Ltd., its parent company. This integration allows HDFC Bank to leverage its expanded capabilities and offer a more comprehensive suite of financial solutions to its customers.
In conclusion, the merger between HDFC Bank and HDFC signifies a significant milestone in the Indian banking sector. The formation of a financial behemoth with unparalleled reach and expertise is poised to reshape the industry landscape. With its expanded offerings and strengthened market position, HDFC Bank is well-positioned to provide innovative and comprehensive financial services to millions of customers across India and beyond.
