The merger of Centurion Bank of Punjab with HDFC Bank has been announced couple of days back. I guess this a prelude to many other mergers which would happen in the next couple of years to come. The merger share swap ratio has been announced today. That is 1 share of HDFC Bank for every 29 shares of CBoP. (1:29) CBoP itself is an amalgamated organisation of Centurion Bank, Bank of Punjab and Lord Krishna Bank. HDFC Bank has also seen merger earlier when it acquired Time Bank.
What HDFC Bank gets out of this merger?
1. HDFC Bank gets licenses for 400 odd branches through this acquisition. Today morning, Mr BD Narang, former Chairman and Managing Director of Oriental Bank of Commerce who handled ther merger of Global Trust Bank with OBC, was saying that for HDFC Bank in the normal course would have taken 10 years to get these branch licenses. Then it is a good thing for HDFC Bank.
2. Centurion Bank has relationship with lot of two-wheeler borrowers who are typically in the lower middle income group. With the system driven approach and better product profile of HDFC Bank, it would be able to leverage the existing client relationships.
3. HDFC Bank gets access to branches in southern and northern India. CBoP is strong in Kerala due to the merger of Lord Krishna Bank and it is good break for HDFC Bank, I guess.
As of now, the merger seems to be in favour of HDFC Bank than with CBoP.
There are many other banks waiting to be acquired by a bigger bank like Lakshmi Vilas Bank, City Union Bank, Dhanalakshmi Bank, Catholic Syrian Bank, though none of them dont have any publicly demonstrated intention of selling it out.