HDFC twins’ merger may take effect July 1; boards to meet on June 30

It will be the last board meeting of HDFC. “The effective date for the merger is July 1. Most approvals are in place,” Parekh said on the sidelines of the launch of the HT Parekh Legacy Centre.

 

Later in a stock exchange filing, HDFC said both companies are working towards completing all the necessary protocols for the completion of the proposed amalgamation. However, the dates are tentative and subject to completion of certain formalities, including ones beyond the control of HDFC or HDFC Bank, said HDFC.

Reacting to reports on the tentative date for the merger, the HDFC stock closed 1.6 per cent higher at Rs. 2,762 per share; the stock of HDFC Bank closed 1.38 per cent higher at Rs. 1,658 per share on the BSE.

 

Going by the performance of both entities for 2022-23, the asset base of the merged entity is Rs. 31.92 trillion.

 

Parekh also indicated the tentative record date of July 13 for determining the shareholders of HDFC who would be allotted equity shares of HDFC Bank in line with the share exchange ratio.

 

On April 4, 2022, the boards of HDFC and HDFC Bank approved the merger. It was envisaged that the merger would be completed in 12–15 months.

 

A central team, with members from each company and several committees, worked on a business integration plan. Meanwhile, legal approvals were sought from shareholders, banking, the securities market, and competition regulators, as well as stock exchanges, with the final go-ahead granted by the National Company Law Tribunal in March.

 

The share exchange ratio for the amalgamation of the corporation with and into HDFC Bank will be 42 equity shares of a face value of Rs. 1 each of HDFC Bank for every 25 fully paid-up equity shares of a face value of Rs. 2 each of the corporation.

 

After merger, HDFC Bank will be 100 per cent owned by public shareholders. Existing shareholders of HDFC will own 41 per cent of HDFC Bank.

 

Parekh said more than 90 per cent of the staff at HDFC would join the bank and continue to be engaged in mortgage lending at the bank. At present, HDFC has about 4,000 employees on its rolls.

While the bank and the housing finance company have different payscales, the salaries of HDFC employees will not be cut under the combined entity. There will not be any golden handshake (special retirement scheme) either, the chairman added.

Parekh said all assets, including the properties of HDFC, would be a part of HDFC Bank on integration.

The integration process covering people and products is expected to be smooth, as the product and business profiles are not similar but complementary.

The Reserve Bank of India has given HDFC two years to exit the education business. As a step to comply with the regulator’s advice, HDFC has signed a pact with private equity investors to sell a 90 per cent stake in HDFC Credila, an ‘education loan specialist’.

Parekh added that it is also in the process of acquiring the existing three schools HDFC runs in Gurugram, Bengaluru, and Pune.