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HDFC Bank's Remarkable Merger Propels Total Business Beyond Rs 41 Lakh Crore Mark!

In a significant development, the reverse merger between HDFC and its subsidiary HDFC Bank has propelled the merged entity's total business to an impressive figure exceeding Rs 41 lakh crore. This places HDFC Bank in closer proximity to the country's largest lender, State Bank of India (SBI). As of March 31, 2023, SBI reported a total business of Rs 70.30 lakh crore. It is worth noting that the combined profit of the merged entity stands at a remarkable Rs 60,000 crore, surpassing the Rs 50,232 crore recorded by SBI in FY23.

Following the merger, HDFC Bank has secured the position as the world's fourth most valued lender, while also narrowing the asset size gap with state-owned SBI to become the second-largest bank in India. The merged entity's total business stood at Rs 41 lakh crore by the end of March 2023, with a net worth exceeding Rs 4.14 lakh crore. With the merger in effect, HDFC Bank's capital has increased to Rs 1,190.61 crore, providing it with the ability to adjust its share capital as needed.

HDFC Investments and HDFC Holdings have been successfully amalgamated into HDFC Limited, and their dissolution without winding up occurred on July 1, 2023, as stated in a regulatory filing by HDFC Bank. Similarly, HDFC Limited has also been amalgamated into HDFC Bank, and its dissolution without winding up took place on July 1, 2023.

With this merger becoming effective, HDFC Bank is now fully owned by public shareholders, while existing HDFC shareholders will hold 41% ownership in the bank. Every HDFC shareholder will receive 42 shares of HDFC Bank for every 25 shares they currently hold. The board of directors of HDFC Bank, in consultation with the board of directors of HDFC Limited, has set July 13, 2023, as the date for determining the shareholders of HDFC Ltd who will be issued and allotted shares of HDFC Bank.

Furthermore, July 13 has been designated for the continuation of warrants of HDFC Limited in the name of HDFC Bank. The board has also fixed July 12, 2023, for the transfer of non-convertible debentures, and July 7 for the transfer of commercial papers from HDFC Ltd to HDFC Bank.

The merger of these entities brings together significant synergies, poised to create substantial value for various stakeholders including customers, employees, and shareholders. The increased scale, comprehensive product offering, balance sheet resiliency, and ability to leverage synergies across revenue opportunities, operating efficiencies, and underwriting efficiencies are expected to contribute to this value creation.

In a symbolic move, HDFC Bank has initiated a rebranding exercise, prominently displaying its colors across all of HDFC Ltd's 500+ branches and offices. The corporate headquarters of the erstwhile HDFC at Ramon House already showcases the HDFC Bank branding, with the entire rebranding process estimated to be completed within the next 24 hours.

Notably, dedicated teams have been diligently working since the merger was announced on April 4, last year, to ensure a seamless integration. As part of the all-share deal valued at USD 40 billion, which stands as the largest in Indian corporate history, HDFC Bank had committed to absorbing all of its parent company's 4,000+ employees.

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