Date:26/02/2008 URL: http://www.thehindu.com/2008/02/26/stories/2008022655601600.htm

Business

HDFC Bank, Centurion Bank of Punjab merger swap fixed at 1:29

Special Correspondent

The two boards will meet on Feb. 28 to consider draft scheme of amalgamation

Preferential offer to HDFC planned
HDFC Bank to retain name post-merger

MUMBAI: The boards of HDFC Bank and Centurion Bank of Punjab (CenBoP) on Monday approved a swap ratio of 1:29 (one share of HDFC Bank for every 29 shares of Centurion Bank of Punjab held), for the proposed merger of Centurion Bank of Punjab with HDFC Bank. The name of the bank would remain as HDFC Bank.

The combined entity would have a nation-wide network of 1,148 branches, the largest among private sector banks, a strong deposit base of around Rs. 120,000 crore and net advances of around Rs. 85,000 crore.

The balance-sheet size of the combined entity would be over Rs. 150,000 crore. The draft scheme of amalgamation, the due diligence report and any other matter as required will be considered by the board of HDFC Bank in its meeting scheduled for February 28.

The board of Centurion Bank of Punjab will also meet on the same day in order to consider the draft scheme of amalgamation and any other matters as required.

HDFC Bank’s board noted that in the event of the merger of Centurion Bank of Punjab with HDFC Bank, being approved at its meeting on February 28, it would consider making a preferential offer worth Rs. 3,500 crore to its promoter, Housing Development Finance Corporation (HDFC), to enable HDFC to maintain its percentage of shareholding in the merged entity.

HDFC Bank’s board also noted that Rana Talwar, Chairman, Centurion Bank of Punjab, had been offered a seat on the board as non-executive director and Shailendra Bhandari will be invited to join the board as Executive Director.

“We are among the first to get a banking licence, the first to do a merger in the private sector with Times Bank in 1999, and now if this deal happens, it would be the largest merger in the private sector banking space in India,” said Deepak Parekh, Chairman, HDFC, while addressing a press conference here.

“This opportunity arose and we thought it is an attractive route to supplement HDFC Bank’s organic growth. We believe that Centurion Bank of Punjab would be the right fit in terms of culture, strategic intent and approach to business,” Mr. Parekh added.

Mr. Talwar said HDFC Bank would create a world-class bank in quality and scale and would set the stage to compete with banks both locally and globally.