Further, the boards of both banks will meet again on February 25 to consider the swap ratio after receipt of the valuation reports, and on February 28 to consider the draft scheme of amalgamation and any other matters as required, said a press release issued by HDFC Bank here. HDFC Bank as on December 31, 2007, has a network of 754 branches and 1,906 ATMs in 327 towns/cities. Centurion Bank of Punjab has 394 branches and 452 ATMs in 180 locations across the country.

The proposed merger has been spearheaded by Housing and Development Finance Corporation Chairman Deepak Parekh, Centurion Bank of Punjab Chairman Rana Talwar and Ambit CEO Ashok Wadhwa, said a senior HDFC Bank executive.

Combined forces

According to sources familiar with the development, indications are that a Centurion shareholder will get one share of HDFC Bank for every 20 shares.  However, the exact ratio will be arrived at after a consensus, said a source.  With this proposed merger, HDFC bank will emerge as India’s second largest private sector lender after ICICI bank and the combined entity could have a market capitalisation of about Rs 63,000 crore based on their current market valuation.

Currently, CBoP is the tenth most valued bank in India with a market cap of about Rs 10,500 crore, while HDFC bank is the third-most valued at over Rs 52,500 crore. 

Significantly, the bank’s presence in the north and south will receive a boost. Centurion has nearly 170 branches in the north and around 140 branches in the south, whereas HDFC Bank has 250 branches in the north and 150 in southern India.

Based on their financial parameters, the merger should carve a strong banking entity and help HDFC Bank to consolidate its position as the third largest bank in India after State Bank of India and ICICI Bank.