CBoP, HDFC Bank to plan in-principle merger on Sat

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By Arun Giri/CNBC-TV18

Centurion Bank of Punjab to plan in-principle merger with HDFC Bank on Saturday, reports CNBC-TV18. Yesterday, CNBC-TV18 reported on a possible merger between the two.

The deal could be signed as quickly as next week. Sources in both banks said the board meeting would be held tomorrow morning to give an in-principle approval to the deal. As early as Monday or Tuesday, there will be another board meeting, which will consider the swap ratio. We learn that the valuation reports are on its way. It will be in by the next 48-72 hours.

 

The swap ratio could be decided as early as Monday or Tuesday. We learn that by next Thursday or Friday, you could have both boards actually approving the merger scheme. RBI's approval will be sought post that. That is critical because it has taken a long time to come in the case of a couple of mergers. RBI has been kept in the loop, as it is one of the biggest banking merger in India Inc's history. Sources said positive signals have emanated from RBI and both banks clearly are looking at a very quick timeline.

 

 

Centurion Bank of Punjab is likely to be valued at close to Rs 12,000 crore, or USD 3 billion. With respect to HDFC Bank, we are not quite clear on the valuation. If CBoP is close to value at Rs 12,000 crore, it means a share price of around Rs 63-64 per share. We are quite confident that the share price of CBoP is likely to be between Rs 63-64 per share and that is likely to be the valuation. So, we have to see what HDFC Bank's valuation is and then arrive at a share swap ratio.

 

This is one of the biggest mergers in India Inc. Sources said that ICICI was interested and in the race. Sources said that they were ready for a bidding war. But what finally prevailed was the fact that Centurion Bank of Punjab thought HDFC Bank was a better cultural fit and they were not quite confident of ICICI Bank.

 

Aditya Puri, MD of HDFC Bank and Shailendra Bhandari, MD of CBoP go back a long way. Both are ex-Citibankers and both have worked in HDFC Bank before. So, Shailendra Bhandari, too, is an ex-HDFC Banker. That might finally have clinched.