Presentation1 hdfc& cbop
Transcript of Presentation1 hdfc& cbop
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HDFC BANK
AND
CENTURION
BANK OF
PUNJAB
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BASICS
What is merger?
What is Acquisition?
Why merger and Acquisition ?
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Special about the topic
HDFC bank acquire CBOP
28th February 2008
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HDFC BANK
Promoted by HDFC in 1995
11 million customer
Branches
Earnings
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MANAGEMENT
Aditya puri
Managing Director
Mr. Harish Engineer
Mr. PareshSukthankar
Mr. KekiM.Mistry
Mr. CM Vasudev
Dr. Pandit PalandeMr. Ashim Samanta
Mrs. Renu Karnad
Managing Director Directors
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CENTURION BANK OF PUNJAB
Formed in 2005
Customer Strength
Branches
Earnings
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MANAGEMENT
Riana Talwar
Y KModi Kamlesh Vilkamsey
S V Venkiteswaran
K K Abdul Razak
Anju Kumar S K Jain
Managing Director Directors
Mr. SailendraBhandari
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KEY BUSINESS PARAMETERS
HDFC BANK CBOP
Branches (Nos) 754 394
ATM (Nos) 1906 452
Customer a/c 10 2
Debit card 5 1.1
Credit cards 3.2 0.2
(figures are in million)
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WHYMERGER- HDFCAND CBOP
Increase in HDFCs advances and deposits by 20 %
Expected increase in banks branch network from 754 to 1148
branches.
The employees are highly talented and efficient
The CBOP bank has strong leadership in market
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WHYMERGER-CBOP
Premium valuation of CBOP
Increase in CASA ratios of CBOP
Technological benefits
Ability to deliver world class service with rapid response
time
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MAJOR ISSUES INVOLVED
Valuation of CBOP is critical as HDFC will have to pay 1/3rd of values getting from its own branches
CBOP has workers union inherited from lord Krishna
Bank where as HDFC has worked under union freeenvironment
CBOP- low cost of operations and low cost of products
HDFC- more universal and sophisticated
More positives than negatives and merger was on righttrack
A friendly merger
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AWIN-WIN SITUATION
Both companies have strong points.
The deal will increase footprint and asset holding.
Network concentration in different parts
CBOP has 170 branches in north and 140 in south region whereas HDFC has 250 in north and 150 in south
The HDFC has net margin of 4.3 % and CBOP has 3.6 %
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The CASA ratio stands at 50.9% for HDFC and 24.5% forcbop
The capital adequacy for HDFC Bank stands at 13.8% asagainst 11.5% for CBoP.
CBOP has good amount of foreign holding
Advances: cbop has 15000 crores and hdfc has 71500crores.
Deposits: 20000 crores with cobp whereas 100000 crorewith HDFC
On financial parameters the merger would create strongbanking entity
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AFTERMATH OFMERGERNetwork expansion
-Network expansion in terms of state wise branches
-Dominance in areas of two-wheelers, mortgages, personal loans and
commercial vehicles.
HDFC have emerged as biggest private banks in terms of branches
Positive aspects of merger
Negative aspects of merger
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The CASA ratio stands at 50.9% for HDFC and 24.5% forcbop
The capital adequacy for HDFC Bank stands at 13.8% asagainst 11.5% for CBoP.
CBOP has good amount of foreign holding
Advances: cbop has 15000 crores and hdfc has 71500crores.
Deposits: 20000 crores with cobp whereas 100000 crorewith HDFC
On financial parameters the merger would create strongbanking entity
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MAJOR BENEFITSACCRUED
Region wise distribution
reach:
Particulars CBOP HDFC
Metro 127 287
Non- metro 267 467
Metro
proportion
32% 38%
Non-metro
proportion
68% 62%
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Complementary overlay
Higher productivity to help HDFC bank to bring down cost toincome ratio.
Strong and experienced management team would add tointernational business
Performance improvement and benefits to accrue over mediumterm
HDFC CBOP
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POST MERGER SCENARIO
Retail segment would continue to be main focus
Post merger the HDFCs stake was expected to fall by18.7%
Issue of 26.3 million share to maintain its 23.28%
stake HDFC was to infuse 39 bn to maintain ownership
CBoP with weaker asset profile with net NPAs of1.6% as against 0.4% for HDFC Bank. Going forward,HDFC Bank (combined entity) would aim to maintain
its NPA profile at these levels, which would require acharge of ~Rs2bn.
In addition, it is expected that HDFC Bank wouldprovide for another Rs1.5bn towards any potentialNPAs.
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POST MERGER SNAPSHOT RSMNParameters HDFC CBOP Merged entity
Branch 754 394 1148
ATM 1906 452 2358
Deposits 993869 207100 1200969
CASA ratio% 51 25 46
Share capital 3541 1873 4301
Net Worth 113584 19633 225742
Total Assets 1,314,395 254039 1660959
PAT 11415 1214 12629
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GROWTH IN PAT
Post merger in FY 09 PAT rose from 15902 to
22450 rs mn
EPS also increased from 44.9 rs to 52.8 rs.