Professional Documents
Culture Documents
MPE-15
by Subhash, Gayathri, Kalpana, Lal Bahadur, Jerilee, Rupam
Agenda
Company Profiles
Post-Acquisition Status
HDFC, Indias leading housing finance company - one of Indias premier banks providing a
wide range of financial products and services to its over 11 million customers (prior to
merger).
Uses multiple distribution channels - pan-India network of branches, ATMs, Phone Banking,
Net Banking and Mobile Banking
Emerged as a leading player in Retail Banking, Wholesale Banking and Treasury Operations
Competitive strength - use of Technology and ability to deliver world-class service with rapid
response time
Successfully gained market share in its target customer franchises while maintaining healthy
profitability and asset quality
As of 2007, the Bank had a network of 754 branches and 1906 ATMs in 327 cities
Incorporated in 1994
Company
Profile
Centurion
Bank of Punjab
One of the leading new
generationprivate
sector banks in India
Served Individual Consumers, small and medium businesses and large corporations with full
(CBoP)
range of financial products and services - investing, lending and advice on Financial Planning
Offered its customers an array of wealth management products such as mutual funds, life and
general insurance
Strong player in Forex services, Personal Loans, Mortgages as well as Agricultural loans.
In 2007, merged with Lord Krishna Bank (LKB) which strengthened geographical reach
Nationwide Franchise of 394 Branches and 452 ATMs in 180 locations across the country
Employee base of over 7500 employees and was listed in major India stock Exchanges
Bank of Punjab merged with Centurion Bank - to form Centurion Bank of Punjab
Strategic Intent
Merger
Merger Date : February 25
behind
the
2008
Value of the Merger : $ 2.5 billion (Rs 1500 billion)
th
HDFC Bank one of the first private-sector banks to get off the ground when Indian regulators began giving out new privatesector banking licences in the early 1990s
Looking for an appropriate merger opportunity that would add scale, geography and experienced staff to its franchise
Centurion Bank of Punjab was a right fit in terms of culture, strategic intent and approach to business. CBoP was concentrated
in the northern parts of the country, HDFC Bank was focused throughout India.
Centurion Bank of Punjab set benchmarks for growth and had a large nationwide network, an extremely valuable franchise,
7,500 talented employees, and strong leadership positions in the market place.
Merger was expected to provide economies of scale, wide range of products, and Dominance in the competitive Banking Industry
Merger was important to face competition from foreign banks looking to enter the Indian Banking front
Both banks had a strong foothold in various sectors like SME, Retail Segments, Retail deposit franchise, vehicle financing, etc.
and the combined entity was expected to have bigger synergies in these areas.
CBoP's asset quality and resource profile, though healthy, were slightly weaker than HDFC Bank's own and could have
impacted HDFC Bank adversely in the short term.
According to rating agency CRISIL, the benefits of an expanded branch network and wider geographical coverage will
more than offset any short-term negatives.
Overall the merger strengthened HDFC Bank's distribution network in the northern and the southern regions.
Integration was smooth as there was no overlap
Some roadblocks expected post merger were technological aspects, HR Mapping and operational Issues
Post-Acquisition
Status
Merged entity was profitable with profits over Rs 1590 Crores in the year immediately after the merger.
The group managed profits of INR 2244 Crores in 2009 and INR 2948 Crores in 2010.
Some of the other benefits reaped by HDFC from this merger are:
Access to 394 branches of CBoP and an increased presence in Southern and Northern States.
Greater penetration to many parts of Northern India with a strong presence of CBoP pre-merger.
CBoPs strong SME relationships complemented HDFC bias towards highly rated corporates thus expanding HDFCs
base.
Became the 7th largest bank with assets worth Rs. 1097 billion
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