hdfc cbop new

7/28/2019 Hdfc Cbop New

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HDFC CBoP MergerThe Largest Indian Private Banking Merger


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Promoted by HDFC in 1995

Serving more than 11 million

customers in more than 300 cities

Total 800 branches and 2000

ATMs


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One of the leading Pvt sector banks inIndia

Lord Krishna bank merged with CBoP in

2007

400 branches 452 ATMs in 180 locations

Employee base of 7500

CBOP is also a strong player in foreign

exchange services, personal loans,

mortgages and offers a full suite of NRIbanking products to overseas Indians.


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How They Benefit from the Merger

The merger will be a win-win

situation for HDFC Bank as it would

acquire around 400 branches

and skilled personnel.

Greater access to North as well as

South of India would also strengthen

their presence in those regions.

Natural synergy of vehicle

financing

CBOPs profit constitutes 11%

of that of HDFC Bank.

Access to technology ofHDFC

HDFC has huge retail deposit

franchise

HDFCs brand value

The current market

capitalization of HDFC Bank is

Rs 52,263 crore,


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The Financial Data

The share swap ratio for the proposed merger of Centurion Bank of Punjab with

HDFC Bank was 1:29

HDFC Bank was expected to pay Rs 10,000-Rs 12,000 crores (Rs 100-120 billion) in

shares for absorbing CBoP

Post merger HDFC Bank becoming the 7th largest bank with asset size of Rs.1097

billion

The combined entity having 1,100-1,200 branches

Pooling of Interest Methods used for accounting


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The EPS Analysis

The earnings of HDFC bank in 2007 was Rs 11414500000

The earnings of CBoP in 2007 was Rs 1213800000

No of shares of HDFC bank in 2007 was 319389608

No of shares of CBoP in 2007 was 1698989540

EPS of HDFC bank in 2007 was Rs 35.74

EPS of CBoP in 2007 was Rs 0.72

Exchange ratio = 1 sh of HDFC Bank/ 29 sh of CBoP = 0.03448

Total no of shares of the merger = 319389608 + 0.03448*1698989540 = 377975454

Final EPS = (11414500000 + 1213800000) / 377975454 = 33.41


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HDFC Bank pre merger EPS = 35.74HDFC Bank post merger EPS = 33.41

So, there would be a slight dilution for HDFC Bank in the medium-term. CBoP

parameters are currently down because it recently acquired Lord Krishna Bank.

Turnaround is expected to happen and the parameters, as per revenues per branchesor profitability per branches for CBOP, are expected to improve as HDFC Bank

takes over.

So, in the short-term, it might be dilutive for HDFC Banks earnings. But in the

longer-term, the merger is expected to be in favour of HDFC Bank.


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Thank You!

Presentation Prepared by:

Debarshi Das (Roll 08)Goutam Shit (Roll)

Prattoy Chatterjee (Roll)

Priyanka Dey (Roll) &

Sourav Biswas (Roll)

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