HDFC BANK AND

CENTURION
BANK OF PUNJAB
BASICS
 What is merger?

 What is Acquisition?

 Why merger and Acquisition ?

 Special about the topic

 HDFC bank acquire CBOP

 28th February 2008

HDFC BANK
 Promoted by HDFC in 1995

 11 million customer

 Branches

 Earnings
MANAGEMENT
Managing Director Directors

 Mr. Harish Engineer

 Mr. Paresh Sukthankar

 Mr. Keki M. Mistry

 Mr. C M Vasudev
Aditya puri
 Dr. Pandit Palande
Managing Director
 Mr. Ashim Samanta

 Mrs. Renu Karnad

CENTURION BANK OF PUNJAB
 Formed in 2005

 Customer Strength

 Branches

 Earnings
MANAGEMENT
Managing Director
Directors

 Riana Talwar
 Y K Modi

 Kamlesh Vilkamsey

 S V Venkiteswaran

 K K Abdul Razak
Mr. Sailendra  Anju Kumar
Bhandari
 S K Jain
KEY BUSINESS PARAMETERS
HDFC BANK CBOP
 Branches (Nos) 754 394
 ATM (Nos) 1906 452
 Customer a/c 10 2
 Debit card 5 1.1
 Credit cards 3.2 0.2
(figures are in million)
WHY MERGER- HDFC AND CBOP

 Increase in HDFC’s advances and deposits by 20 %

 Expected increase in banks branch network from 754 to 1148 branches.

 The employees are highly talented and efficient

 The CBOP bank has strong leadership in market

WHY MERGER-CBOP
 Premium valuation of CBOP

 Increase in CASA ratios of CBOP

 Technological benefits

 Ability to deliver world class service with rapid response time

MAJOR ISSUES INVOLVED
 Valuation of CBOP is critical as HDFC will have to pay 1/3 rd of
values getting from its own branches

 CBOP has workers union inherited from lord Krishna Bank where
as HDFC has worked under union free environment

 CBOP- low cost of operations and low cost of products

HDFC- more universal and sophisticated

 More positives than negatives and merger was on right track

 A friendly merger
A WIN-WIN SITUATION
 Both companies have strong points.
 The deal will increase footprint and asset holding.
Network concentration in different parts
 CBOP has 170 branches in north and 140 in south region where as HDFC
has 250 in north and 150 in south
 The HDFC has net margin of 4.3 % and CBOP has 3.6 %
 The CASA ratio stands at 50.9% for HDFC and 24.5% for cbop

 The capital adequacy for HDFC Bank stands at 13.8% as against

11.5% for CBoP. 

 CBOP has good amount of foreign holding

 Advances: cbop has 15000 crores and hdfc has 71500 crores.

 Deposits: 20000 crores with cobp whereas 100000 crore with HDFC

 On financial parameters the merger would create strong banking

entity
AFTERMATH
Network expansion
OF MERGER
-Network expansion in terms of state wise branches
-Dominance in areas of two-wheelers, mortgages, personal loans and commercial
vehicles.
HDFC have emerged as biggest private banks in terms of branches

Positive aspects of merger

Negative aspects of merger

 The CASA ratio stands at 50.9% for HDFC and 24.5% for cbop

 The capital adequacy for HDFC Bank stands at 13.8% as against

11.5% for CBoP. 

 CBOP has good amount of foreign holding

 Advances: cbop has 15000 crores and hdfc has 71500 crores.

 Deposits: 20000 crores with cobp whereas 100000 crore with HDFC

 On financial parameters the merger would create strong banking

entity
MAJOR BENEFITS ACCRUED
 Region wise distribution reach:

Particulars CBOP HDFC

Metro 127 287
Non- metro 267 467
Metro 32% 38%
proportion
Non-metro 68% 62%
proportion
 Complementary overlay
 Higher productivity to help HDFC bank to bring down cost to income ratio.
 Strong and experienced management team would add to international
business
 Performance improvement and benefits to accrue over medium term

CBOP
HDFC
POST MERGER SCENARIO
 Retail segment would continue to be main focus
 Post merger the HDFC’s stake was expected to fall by
18.7%
 Issue of 26.3 million share to maintain its 23.28% stake

 HDFC was to infuse 39 bn to maintain ownership

 CBoP with weaker asset profile with net NPAs of 1.6%

as against 0.4% for HDFC Bank. Going forward, HDFC
Bank (combined entity) would aim to maintain its NPA
profile at these levels, which would require a charge of
~Rs2bn.
 In addition, it is expected that HDFC Bank would
provide for another Rs1.5bn towards any potential NPAs.
POST MERGER SNAPSHOT RS MN
Parameters HDFC CBOP Merged entity
Branch 754 394 1148
ATM 1906 452 2358
Deposits 993869 207100 1200969
CASA ratio% 51 25 46
Share capital 3541 1873 4301
Net Worth 113584 19633 225742
Total Assets 1,314,395 254039 1660959
PAT 11415 1214 12629
GROWTH IN PAT
 Post merger in FY 09 PAT rose from 15902 to 22450 rs
mn
 EPS also increased from 44.9 rs to 52.8 rs.