Capital adequacy for HDFC Bank stands at 13.8 per cent, and for Centurion Bank of Punjab at 11.5 per cent, which according to analysts is a good thing for creating astrong banking entity.
HDFC Bank approves merger share swap ratio of 1: 29Centurion Bank of Punjab shares
: At its meeting held inMumbai this morning, the Board of HDFC Bank has approved a share swap ratio for acquiring the country's fourth largest private bank, Centurion Bank of Punjab, at oneequity share of Rs10 of HDFC Bank for every 29 equity shares of Centurion Bank of Punjab of a face value of Re1.On Saturday, 23 February, the board of directors of Centurion Bank of Punjab andHDFC Bank, met separately and accorded an in-principle approval to pursue merger talks (
)The merger ratio, subject to due diligence to be conducted, was worked out by the joint valuation report submitted by accounting firm Ernst & Young Pvt Ltd and Dalal& Shah, chartered accountants.The board noted that in the event of the merger, it would consider to its promoter,Housing Development Finance Corporation Ltd, to enable HDFC to maintain itsshareholding percentage in the bank.HDFC Ltd, HDFC Investments and HDFC Holdings jointly own 23.28 per cent inHDFC Bank and FII's own 26.57 per cent. Domestic mutual funds and insurancefirms jointly own another 6.20 per cent, while the central and state governments own1.08 per centThe bank's board will meet on 28 February to consider the draft scheme of amalgamation and due diligence report.The board also said that in the event of transaction being concluded, HDFC Bank Ltdwould make a preferential offer to its parent, Housing Development FinanceCorporation Ltd (HDFC), to enable it to maintain its shareholding percentage in theBank.The announcement of the share swap ratio saw the HDFC Bank scrip rise to Rs1,524(+3.33 per cent), while that of CBoP declined to Rs52.30 (-7.27 per cent).The merger with Centurion, ranked fourth among private sector banks, will propelHDFC Bank to become the third largest bank in the country with the largest branchnetwork among private banks.