HDFC BANK & TIMES BANK

MERGER

PRIYANKA AGGARWAL
6833
 HDFC BANK

• HDFC bank incorporated in 1994 by Housing Development Finance Corporation Limited

(HDFC), it was amongst the first to receive an 'in principle' approval from the Reserve
Bank of India (RBI) to set up a bank in the private sector.

• currently has an nationwide network of 1,986 Branches and 5,471 ATM's in 996 Indian
towns and cities.

• HDFC bank provide wholesale banking services, retail banking services, treasury.

• Mr. C.M. Vasudev has been appointed as the Chairman of the Bank with effect from 6th
July 2010

• The MD of the bank is Mr. Aditya Puri

 Times bank
• Times bank was incorporated on 6th july,1994.

• The Bank was promoted by Bennett, Coleman and Co. limited & its subsidiaries.

• The Bank is in the process of tying-up with Brokering and Research Outfits for making
Wealth Management Services available for its premium clients.

• Times Bank is also a Depository Participant with National Securities Depository

Limited & provides services for investing in the shares and debentures in the
dematerialised form.
 MERGER
•In a milestone transaction in the Indian banking industry, Times Bank Limited was
merged with HDFC Bank Ltd.on February 26, 2000.
•This was the first merger of two private banks in the New Generation Private Sector
Banks.
•As per the scheme of amalgamation approved by the shareholders of both banks and the
Reserve Bank of India, shareholders of Times Bank received 1 share of HDFC Bank for
every 5.75 shares of Times Bank.

•Stock swap ratio - 1: 5.75

•This was the first deal which took place in the Indian banking sector which was market
led.

•Total market value of the deal was 5775.75 Million Rs and it was a total stock deal .
 Reasons..
• Branch network would increase by over 50% & thus providing increased geographical
coverage.
• Increase the total number of retail customer accounts so as to increase deposit & loan
products.
• After the merger the bank would be able to use Times Bank's lower cost alternative channels
like phone banking, internet banking etc. and thereby the reducing of operating costs.
• The merger would increase the presence of HDFC bank in the depository participant activities.
• Improved infra structure facilities and central processing would help in deriving economies of
large scale.
 Effects of merger
• At the time of merger, Times Bank was suffering with low profitability and high NPAs; the
acquisition by HDFC bank has given relief to both shareholders and depositors of the bank.
• Similarly HDFC bank has gained out of retail portfolio of the Times Bank and subsequently
emerged as largest private sector bank in India.
• The Bennett Coleman group, which promoted the Times Bank, got 7.5 percent stake in HDFC
Bank. 
• The equity capital of HDFC Bank increased from Rs. 200 crore to Rs. 233 crore.
• This merger increased the customer base of HDFC Bank by 2,00,000 taking the figure to
6,50,000. 
• It also provided cross-selling opportunities to the increased customer population. 
• The branch network increased from 68 to 107. 
• HDFC Bank’s total deposits would be around Rs. 6,900 crore and the size of the balance
sheet would be over Rs.9, 000 crore. 
 FINDINGS
Item Combined pre-merger Post merger (%)
average
Total income 36.39 59.03
EBT 22.65 47.63
PAT 23.78 57.32
Net revenue per -7.14 26.75
branch
Income to 1.51 9.88
deposit

Successful deal..
 Conclusions
1. Before the merger the combined average non-operating losses of the bank was only 2.2 per
cent of the total income. But that has increased to 6.15 per cent after the merger.

2. The average spread has increased by 10 per cent after the merger. This implies that HDFC Bank
has truly benefited by merging with Times bank who had a good retail banking
business.
3. During the pre merger era the combined entity used to consume only 8.08 per cent of its total
income for provisions. But after the merger this increased to 13.82 per cent denoting a
rising level of N.P.A
4. After the merger the bank has been following a policy of generating income from non-business
activities.This is very clear from the investment deposit ratio.
5. The post merged HDFC bank has been able to mobilize more amount of cheap funds in the form
of current and savings deposits. So it can inferred that the HDFC bank could properly
utilize the good foundation that Times bank had in retail banking.

6. The merger deal did not result in a huge dilution of ownership as the Times group promoters got
only a 7% stake in the newly merged entity.
THANK YOU…..!!