Synergies between HDFC Bank and group companies to deepen following merger: Parekh
HDFC President Dipak Parekh on Friday expressed confidence that the synergy between HDFC Bank The group companies will deepen with the bank taking on the mantle of ownership of the group after a possible reverse merger that will take effect from Saturday.
As Chairman of HDFC Ltd, Parekh said in the recent letter to shareholders that mortgages will now be complemented by HDFC Bank’s core strengths – its sales engine, execution capabilities at scale and deep insights into consumer behaviour.
The reverse merger of the original HDFC Ltd with HDFC Bank is expected to be effective from 1 July.
“For HDFC Bank, a home loan customer represents the beginning of the journey of being a forever customer. HDFC Bank is excited about the potential to cross-sell a range of asset and liability products to home loan customers. This will be done seamlessly on their digitization platforms – all through a one-click experience.”
He said HDFC Bank’s extensive distribution network would be better harnessed for both housing loans and group companies.
“The confidence I derive is the agreed-upon principle of this integration – preserving the fabric” of HDFC’s modus operandi, Parekh said. This was publicly expressed by the leadership at HDFC Bank.”
He said that what the future holds, only time will tell, adding that the biggest risks organizations face today is staying in the status quo, believing that what succeeded yesterday will continue in the future.
He said that change requires courage because it removes one from the cocoon of comfort and intimacy.
Parekh said it was time for him to hang up his boots and expressed hope for an exciting future and prosperity. “It is time to hang up my shoes with both expectations and hopes for the future. While this will be my last communication to HDFC shareholders, rest assured that we are now well on our way to a very exciting future of growth and prosperity,” he said.
Parekh had said earlier this week that June 30 would be his last working day after spending 46 years at the corporation and when asked what he would do after the board meeting he jokingly quipped. “I’ll have some drinks.”
He noted that working on a merger of this magnitude has been challenging and rewarding, “However, what has struck us most is the tremendous goodwill and strong relationships that HDFC has as a group.”
The approvals by the Competition Commission of India, the National Company Law Tribunal, shareholders, and regulators were important merger milestones.
“In all our dealings relating to the merger, HDFC Group has been treated in a fair and equitable manner. We are committed to adhering to the basic requirements as laid down by the regulators, while respecting the fact that these decisions are being made keeping in mind the best interests of the Indian financial ecosystem.”
-
Also read: HDFC and HDFC Bank shares rise
HDFC merger challenges and rewards
When HDFC handed over the baton, it was his wish that the core founding values of Kindness, Fairness, Efficiency and Effectiveness would run deep into the fabric of the HDFC Group.
HDFC Bank, billed as the largest deal in India Inc’s history, on April 4, 2022, agreed to acquire the parent company, which is the largest pure mortgage lender, in a US$40 billion all-share deal, resulting in the financial services giant with Combined assets in excess of Rs. 18,000 crore.
Combined shares of the HDFC Twins will have the heaviest weighting of the indices at nearly 14 percent, well above heavyweight Reliance Industries’ 10.4 percent.
Once the transaction becomes effective, HDFC Bank will be 100 percent owned by the general shareholders, and existing HDFC shareholders will own 41 percent of the bank. Each HDFC shareholder will receive 42 HDFC Bank shares for every 25 shares they hold.