The merger gives HDFC on a platter a year plus of growth, and a 50% increase in its banking network. There are synergies the banks can benefit from – Centurion has a strong presence in high-yielding retail loans, while HDFC has been very good at raising low-cost deposits.The HDFC Bank-Centurion Bank merger was agreed upon by both the banks in principle. This will create the largest private sector financial institution in terms of branch network. The share-swap deal, worth over Rs. 10,000 cr, may be worked around the current market price of Rs. 57 a share of CBoP.
The merger of Bank of Punjab (BoP) and Centurion Bank wasannounced in June 2005; BoP is based in the north India and Centurion Bank is present in the southern and western regions. The Reserve Bank of India (RBI) has denied BoP the approval for a preferential allotment of shares to foreign investors. BoP had been searching for investors to increase its Capital Adequacy Ratio (CAR) which was 12.68% before the merger. The union of the two banks has not created a bank of considerable size; however, it has created an impetus to grow and carve a niche for itself.
After the merger, the Bank focused on integration of branches and product offerings. The merged entity has 235 branches and extension counters, 2.2-million customer base and total assets worth Rs. 9,395 cr and deposits of Rs. 7,837 cr. It had a CAR of 16.1% and a considerably high net interest margin of 4.8%. The merger of Centurion Bank and Bank of Punjab to form Centurion Bank of Punjab (CBoP) took place through a share-swap deal. The Swap ratio has been fixed at 4:9, that is, for every four shares of Rs. 10 of Bank of Punjab, its shareholders had received nine shares of Rs. 1 of Centurion Bank. |
