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HDFC-HDFC Bank Merger, Creating the Fourth-Largest Bank in the World

HDFC Bank Challenges Giants, Poised to Redefine Global Banking Landscape

30 June 2023

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Kunal Tyagi

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  • The merger of HDFC Bank and HDFC creates one of the world's most valuable banks, ranking fourth globally in equity market capitalization.

  • The merged entity has a valuation of approximately $172 billion, surpassing prestigious international banks and Indian competitors.

  • HDFC Bank's extensive scale and reach includes a customer base of over 120 million, an expanded branch network of 8,300, and a workforce of more than 177,000 employees.

The merger of HDFC Bank and HDFC has paved the way for the creation of one of the most valuable banks in the world. According to a Bloomberg report, the merged entity will secure the fourth position in equity market capitalization globally, surpassing renowned international banks. With a valuation of approximately $172 billion, HDFC Bank is set to become a formidable contender in the global banking industry, challenging the dominance of American and Chinese banks.


Unprecedented Scale and Reach:


The merger, effective from July 1, will result in a combined asset base of around Rs 18 lakh crore, solidifying HDFC Bank's position among the largest financial institutions worldwide. The new entity will boast an extensive customer base of over 120 million individuals, exceeding the entire population of Germany. Moreover, the branch network will expand to over 8,300, enabling HDFC Bank to further penetrate the Indian market. With a workforce of more than 177,000 employees, the bank is poised for exceptional growth.


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Surpassing International and Indian Peers:


HDFC Bank's remarkable ascent places it ahead of prestigious international banks like HSBC Holdings and Citigroup Inc. Moreover, it outshines its Indian counterparts, the State Bank of India and ICICI Bank, in terms of market capitalization. As of June 22, HDFC Bank's market capitalization stands at approximately $172 billion, dwarfing State Bank of India's $62 billion and ICICI Bank's $79 billion. This accomplishment solidifies HDFC Bank as a prominent player on the global banking stage.


Unprecedented Growth Prospects:


Industry experts have lauded HDFC Bank's ambitious growth projections, which aim to double the bank's size within a remarkable four-year timeframe. With an anticipated growth rate of 18% to 20%, HDFC Bank exhibits strong earnings potential. The bank's strategic plans to double its branch network within the next four years further underscore its commitment to expansion. HDFC Bank's vision for growth positions it as a formidable institution, with the potential to reshape the future of the banking industry.


Implications for Shareholders:


Upon completion of the merger, HDFC Bank will be wholly owned by public shareholders, while existing HDFC shareholders will own 41% of the bank. To facilitate the merger, HDFC shareholders will receive 42 shares of HDFC Bank for every 25 shares they hold, allowing them to participate in the new entity's growth prospects. This represents a significant opportunity for shareholders to benefit from the combined strength and value of the merged bank.


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