Mumbai: Shareholders of Centurion Bank of Punjab will be qualified to exchange 29 shares into one share of HDFC Bank. This follows the board of directors of the two banks approving on Feb 25 a share-swap ratio of 1:29. HDFC Bank''s share closed at Rs 1,422.70, down by 3.5 per cent while Centurion Bank ended the day at Rs 48.25, lower by 14.45 per cent on the BSE on Feb 25. The entire process of the amalgamation will take about four months for completion. The amalgamated entity will be known as HDFC Bank.
The near-term impact on HDFC''s financials will be moderately negative considering the relatively poor financials of Centurion Bank. It will take HDFC Bank a while to leverage the branch network of Centurion Bank to improve its financials. HDFC Bank, said that the merger will create a larger entity and bring together the strengths of both banks in terms of technology, products, distribution, manpower and experience. The net non-performing assets as a percentage of net advances for HDFC Bank for the year 2006-07 stands at 0.43 per cent while that for Centurion Bank is at 1.26 per cent. Post amalgamation, the NPA of HDFC Bank might decline further by 15-20 basis points to 0.6 per cent.
The near-term impact on HDFC''s financials will be moderately negative considering the relatively poor financials of Centurion Bank. It will take HDFC Bank a while to leverage the branch network of Centurion Bank to improve its financials. HDFC Bank, said that the merger will create a larger entity and bring together the strengths of both banks in terms of technology, products, distribution, manpower and experience. The net non-performing assets as a percentage of net advances for HDFC Bank for the year 2006-07 stands at 0.43 per cent while that for Centurion Bank is at 1.26 per cent. Post amalgamation, the NPA of HDFC Bank might decline further by 15-20 basis points to 0.6 per cent.
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