HDFC Bank and TimesBank will complete their merger process by February 25. The two banks have already received approval from the Reserve Bank of India (RBI) for the merger on February 17.
This will make it the first-ever voluntary bank merger to be effected in India.
The market capitalisation of the combined bank (in adjusted terms) has increased nearly 225 per cent from Rs 2,200 crore at the time of the announcement of the merger on November 29, 1999 to around Rs 7,000 crore currently.
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The stock price of HDFC Bank has increased from Rs 80 in November 1999 to Rs 250 recently on the BSE. In fact, the market capitalisation of the bank had overtaken that of its parent company, HDFC, by December 1999.
TimesBank would now cease to exist from February 26, 2000. Nani Javeri, managing director of TimesBank, has resigned from his post. Aditya Puri, managing director of HDFC Bank, would continue as managing director of the merged entity.
According to senior HDFC Bank officials, preparations for the merger have been on since December 1999 and now they were close to completing their arrangements. "All employees will be retained and therefore we will have a staff strength of around 1,800," said the bank official.
Of the 107 existing branches of both the banks, most would be retained. "For any branch that is closed down, another will be opened and thus the number of branches will remain roughly the same," said the official. For instance, HDFC Bank is likely to shut its own branch in Chembur as TimesBank has a more strategically located branch in that area.
Chase Manhattan Bank and HDFC would be putting in an additional Rs 200 crore of capital in the bank by March in order to up their stake to previous levels. The former would have a stake of 15 per cent whereas the latter would have a 30 per cent stake in the bank. Non-resident Indians have a 5 per cent stake in the bank whereas the Jain family (promoters of TimesBank) have a stake of seven per cent.