New Delhi, Apr. 18 (EFE) .- Future merger between HDFC Bank, India’s largest private sector bank, and HDFC Limited, the country’s largest mortgage lender, did not meet early market expectations due to a sharp fall in its share price. .
Moreover, after the initial increase in the value of the two companies’ titles in the Indian National Stock Exchange (NSE), it was 10% in the case of HDFC Bank and 8.7% in the case of HDFC Ltd. On the day the merger was announced on April 4, investors were cautious about the move.
Karan Gupta, director of financial institutions for ratings and research in India, told Efe today, “There are some concerns that the market is aware of and is now reflecting on stock prices.
According to Gupta, some doubts focus on whether HDFC Bank should meet the requirements of the cash balance ratio and legal liquidity, the regulatory requirements for obtaining the portfolio of HDFC Limited, the private sector credit requirements and the costs associated with the merger. , Before starting to give benefits.
If approved by the Reserve Bank of India (RBI), the full consolidation will take place in mid-2023 and will become the largest in the history of the country, making it one of the largest financial institutions in India. Assets valued at $ 359,000 million as of September 2021.
In addition, HDFC Ltd will add another $ 59,000 million to its $ 110,000 million market capitalization as of April 1.
The size of these figures caused great anticipation among investors, and on April 4, HDFC Bank announced that it was going to merge with HDFC Ltd., a 100% mortgage issuer, which was 21% in the bank after the merger.
However, this optimism did not go beyond the first 24 hours, after which the stock price did nothing but fall, not even reaching the level recorded before the merger announcement.
Therefore, the titles of both financial groups recorded an 18% fall in their share price compared to the maximum value reached on the day announced today.
“The market may have overcrowded in the short term. However, the team is still there and they will resolve these issues, though it may take some time,” Gupta said.
Both business groups did not want to comment when asked by Efe.
The merger comes in the context of the Reserve Bank of India (RBI) initiating some regulatory changes for banks and non-bank financial institutions, which will reduce barriers to potential mergers.
Currently, HDFC Bank has over 6,300 bank branches and over 17,000 ATMs, with HDFC Ltd having 651 offices.
hbc / mt / fpa
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