The Boards of HDFC Bank and Centurion Bank of Punjab met today and approved, subject to due diligence, the share swap ratio for the proposed merger of Centurion Bank of Punjab with HDFC Bank. The Scheme of Amalgamation envisages a share exchange ratio of one share of HDFC Bank for twenty nine shares of Centurion Bank of Punjab.

The combined entity would have a nationwide network of 1,148 branches (the largest amongst private sector Banks) a strong deposit base of around Rs. 1,200 billion and net advances of around Rs. 850 billion. The balance sheet size of the combined entity would be over Rs. 1,500 billion.

The share exchange ratio approved by the respective Boards was based on the recommendations made by M/s Dalal & Shah, Chartered Accountants, and Ernst & Young Private Ltd. who acted as independent joint valuers to the transaction.

The draft Scheme of Amalgamation, the due diligence report and any other matters as required will be considered by the Board of HDFC Bank in their meeting scheduled on February 28, 2008. The Board of CBOP will meet on the same day in order to consider the draft Scheme of Amalgamation and any other matters as required.

HDFC Bank’s Board noted that in the event of the merger of Centurion Bank of Punjab with HDFC Bank being approved at its meeting on February 28, 2008, it would consider making a preferential offer to its promoter Housing Development Finance Corporation (HDFC), to enable HDFC to maintain its percentage shareholding in the merged entity. HDFC Bank’s Board also noted that Mr. Rana Talwar has been offered a seat on the Board as non executive director and Mr. Shailendra Bhandari will be invited to join the Board as Executive Director.

Commenting on the proposed merger, Mr. Deepak Parekh, Chairman, HDFC said, “We were amongst the first to get a banking licence, the first to do a merger in the private sector with Times Bank in 1999, and now if this deal happens, it would be the largest merger in the private sector banking space in India. HDFC Bank was looking for an appropriate merger opportunity that would add scale, geography and experienced staff to its franchise. This opportunity arose and we thought it is an attractive route to supplement HDFC Bank’s organic growth. We believe that Centurion Bank of Punjab would be the right fit in terms of culture, strategic intent and approach to business.”

Mr. Aditya Puri, Managing Director, HDFC Bank said, “These are exciting times for the Indian banking industry. The proposed merger will position the combined entity to significantly exploit opportunities in a market globally recognized as one of the fastest growing. I’m particularly bullish about the potential of business synergies and cultural fit between the two organizations. The combined entity will be an even greater force in the market.”

Mr. Rana Talwar, Chairman Centurion Bank of Punjab stated, “Over the last few years, Centurion Bank of Punjab has set benchmarks for growth. The bank today has a large nationwide network, an extremely valuable franchise, 7,500 talented employees, and strong leadership positions in the market place. I believe that the merger with HDFC Bank will create a world class bank in quality and scale and will set the stage to compete with banks both locally as well on a a global level.”

Mr. Shailendra Bhandari, Managing Director and CEO, Centurion Bank of Punjab said, “We are extremely pleased to receive the go ahead from our board to pursue this opportunity. A merger between the banks provides significant synergies to the combined entity. The proposed merger would further improve the franchise and customer proposition offered by the individual banks.”

Sourced From: HDFC Bank Ltd

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