India’s HDFC Bank becomes fourth largest bank in world

India’s HDFC Bank has become the fourth largest bank in the world in terms of market capitalisation after its merger with Housing Development Finance Corporation (HDFC).

The merger came into effect on Saturday. The rank of the HDFC is now next only to JP Morgan Chase & Co, Industrial and Commercial Bank of China and Bank of America.

Indian news outlets said the total business of HDFC Bank stood at Rs 41 trillion at the end of March 2023 with the net worth estimated at over Rs 4.14 trillion.

The combined profit of both merged entities was about Rs 600.00 billion at the end of March 2023 with combined assets of over Rs 18 trillion.

Reuters report said the boards of Housing Development Finance Corp and HDFC Bank on Friday approved July 1 as the effective date of the two financial behemoths' $40 billion merger, the largest in India's corporate history.

Both the companies have set July 13 as the ‘record date’ to swap HDFC's shares with HDFC Bank's stock for its shareholders, HDFC and HDFC Bank said in separate exchange filings on Friday.

As per the deal announced in April last year, shareholders of HDFC will receive 42 shares of HDFC Bank for every 25 shares held, giving them ownership of 41 per cent in the lender.

With the share swap, HDFC Bank will become one of the world's top 10 banks in terms of market capitalisation, as per Refinitiv data.

HDFC Bank's shares have gained about 13 per cent so far since the merger was announced, while the broader Nifty 50 index (.NSEI) has risen over 8 per cent.

After the merger, HDFC Bank has no identified promoter. HDFC Bank CEO Sashidhar Jagdishan will head the combined company, while HDFC's Keki Mistry and Renu Sud Karnad will be on the bank's board.

With the merger, HDFC Bank's total loan book will be over 22 trillion rupees, behind only that of State Bank of India (SBI.NS), the country’s largest lender.

HDFC Bank will keep home loans at the centre of its growth strategy after the merger, with such credit likely to make up nearly a third of the lender's portfolio, two senior officials at the group had told Reuters in June.