HDFC Bank, CBoP merger at 1:29

HDFC Bank today announced a ratio of 1:29 for the merger of Centurion Bank of Punjab (CBoP) with itself.

According to a release issued by HDFC Bank to the BSE today, based on the joint valuation report submitted by Ernst & Young and Dalal & Shah, the board today approved the share swap ratio of one equity share of Rs 10 each of HDFC Bank for 29 equity shares of Re 1 each of Centurion Bank of Punjab. The swap ratio is subject to due diligence to be conducted in this regard.

The bank's board observed that in the event of the merger being approved at its meeting on February 28, 2008, it would consider making a preferential offer to its promoter, Housing Development Finance Corporation (HDFC), to enable HDFC maintain its shareholding in the bank, the release added.

The combined entity would have a nationwide network of 1,148 branches (the largest amongst private sector banks), a deposit base of around Rs 1,20,000 crore and and net advances of around Rs 85,000 crore. The balance sheet size of the combined entity would be over Rs 1,50,000 crore.

Deepak Parekh, chairman, HDFC, said the merger is a "win-win" for both banks. He added that Shailendra Bhandari, CEO, Centurion Bank of Punjab, will now be executive director, HDFC Bank. Rana Talwar, a shareholder in Centurion Bank of Punjab, has been invited to join the board of HDFC Bank, Parekh added.

Aditya Puri, managing director, HDFC Bank said the merger is based on four premises - people, products, distribution and growth. "This is a merger that is fair, professional and clean," Puri said.