HDFC Bank to buy CBoP
In what is likely to be one of the biggest mergers seen in India Inc., HDFC Bank is all set to take over Centurion Bank of Punjab in an all-share deal. The boards of both banks are to meet on 25-Feb to decide on the swap ratio. Ernst & Young and Dalal & Shah have been appointed to determine the ratio.
Both banks are no strangers to mergers, with HDFC Bank having acquired TimesBank in 2000, and CBoP having picked up Bank of Punjab and Lord Krishna Bank. The current situation has come about after the main stakeholders in CBoP, Bank Muscat, Sabre Capital and Kephinance Investment (Mauritius) decided to exit.
It is not yet clear what role, Rana Talwar, the Chairman of CBoP, will have in the merged entity, though he’s an extremely shrewd banker, who’s been there and done it all, so it remains to be seen what he will do next. There is also a question mark over the future of the current CBoP MD, Shailendra Bhandari.
Both banks feel there should not be too many culture related issues. Investors in HDFC Bank clearly didn’t feel so enthused about the deal, though, given CBoP’s higher NPA’s. It was exactly the reverse with the CBoP scrip, though, which has zoomed over the past week.
Pingback: HDFC-Centurion Bank share swap ratio fixed at 1:29 | The Smart Investor