Mumbai: Board of HDFC Bank Monday approved issuance of one equity share for every 29 held in Centurion Bank of Punjab for merger of the two financial institutions.
The board has approved the share swap ratio of one share of Rs10 each of HDFC Bank for every 29 shares of Re1 each held in Centurion Bank of Punjab, HDFC Bank said in a filing to the Bombay Stock Exchange.
The share swap ratio is subject to due diligence to be conducted in this regard, it said.
The board noted that in the event of the merger, it would consider making a preferential offer to its promoter, Housing Development Finance Corporation Ltd, to enable HDFC to maintain its shareholding percentage in the bank.
HDFC Bank’s board will meet 28 February to consider the draft scheme of amalgamation, it said.
With the announcement of share swap ratio, the HDFC Bank scrip surged 3.33 % to Rs1,524, while that of CBoP dropped 7.27% to Rs52.30 on the Bombay Stock Exchange.
The proposed merger would help HDFC Bank o become the largest private sector lender in terms of branch network. The combined branch network would go up to 1,348 as against the existing private sector leader ICICI Bank, which has close to 955 branches.
Country’s second-largest lender HDFC Bank has about 754 branches while CBoP is currently having 394 branches across 180 locations.
However in terms of assets, ICICI Bank would be much bigger than the proposed entity. While ICICI Bank has Rs3,76,700 crore worth of assets, the proposed combined entity would have over Rs1,10,000 crore.
HDFC Bank has a promoter holding of 23.28%, held jointly by HDFC Ltd, HDFC Investments and HDFC Holdings. The bank has 26.57% FII holding, while local mutual funds and insurance firms own 3.39% and 2.81% respectively.
The bank has 1.08% held by central/state governments, according to shareholding pattern as on 31 December, 2007, as filed with the bourses.
Centurion Bank of Punjab, which is the fourth-largest private sector lender, is promoted by Bank of Muscat, HSBC Finance, Sabre Capital. Bank of Muscat holds the maximum equity of 14% in the bank.
Following inorganic route of growth, Centurion Bank had in the past acquired Bank of Punjab and Lord Krishna Bank. HDFC Bank had earlier acquired Times Bank.