The complete process of changing the look of HDFC Ltd offices and branches is expected to take around 24 hours.

HDFC Bank has started rebranding the offices and branches of HDFC Ltd after the merger of the two companies was announced on late Friday.

Branding at the home lending giant’s 500 offices and branches began to take place on the HDFC Bank look on Saturday morning, PTI quoted officials as saying.

The complete process of changing the look of HDFC Ltd offices and branches is expected to take around 24 hours, they said, adding that HDFC Ltd’s corporate headquarters at Ramon House is already among the locations where the branding has been updated.

The rebranding is part of the integration process of the two companies. HDFC Ltd, the parent company of the country’s largest private sector lender, merged into HDFC Bank on Saturday, with both firms’ boards of directors approving the plan first proposed on April 4 of last year. HDFC Ltd, the world’s largest pure-play home funder, goes out of business 44 years after it was created.

The merger of HDFC Bank and HDFC Ltd is the biggest merger in India’s corporate history. The merger has created a financial services behemoth with assets of over $300 billion.

The merger is expected to create synergies and efficiencies for the combined entity. It is also expected to help the combined entity to expand its reach and offerings.

The rebranding of HDFC Ltd offices and branches is a symbolic gesture of the merger of the two companies. It is also a sign of the combined entity’s commitment to its customers and employees.

Sashidhar Jagdishan, managing director and chief executive of HDFC Bank, is scheduled to speak at a town hall meeting later in the evening. Following the merger, around 3,500 HDFC personnel were incorporated into HDFC Bank.

Termed as the biggest transaction in the history of India Inc, HDFC Bank on April 4, 2022, agreed to take over its parent, which is the largest pure-play mortgage lender, in a $40-billion all-stock deal, creating a financial services titan with a combined asset of over Rs 18 lakh crore.

The combined shares of the HDFC twins will have the highest weighting on the indices at close to 14 per cent, much higher than the present index heavyweight Reliance Industries with a 10.4 per cent weightage.

With the deal getting effective, HDFC Bank will be 100 per cent owned by public shareholders, and existing shareholders of HDFC will own 41 per cent of the bank. Every HDFC shareholder will get 42 shares of HDFC Bank for every 25 shares they hold.

In the statement issued on Friday, Jagdishan said the combined strength will help create a holistic ecosystem of financial services.  “We’re truly happy to welcome the talented team of HDFC Ltd into the HDFC Bank family. I believe our journey will be defined by agility, adaptability, and a relentless pursuit of excellence. As we navigate the path ahead, we will embrace challenges as opportunities, learn from our experiences, and strive to be the benchmark of success and integrity in the financial services industry,” he said.

The board of directors of HDFC Bank in consultation with the board of directors of HDFC Limited has fixed July 13, 2023, for determining the shareholders of HDFC Ltd who would be issued and allotted the shares of HDFC Bank, it added.

Besides, July 13 has been fixed for the continuation of warrants of HDFC Limited in the name of HDFC Bank.The board has fixed July 12, 2023, for the transfer of non-convertible debentures while July 7 for the transfer of commercial papers of HDFC Ltd in the name of HDFC Bank.

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On July 1, HDFC Ltd will merge with the bank, providing it an extensive network of specialised branches, highly skilled employees, and a secured mortgage portfolio.

The last two years have seen HDFC Bank underperform in the stock market. The country’s second largest bank’s stock has been range-bound around Rs 1,600 apiece. There is some hope now of a revival. Come July 1, the bank will have an extensive network of specialised branches, highly skilled employees, and a secured mortgage portfolio thanks to the merger of HDFC Ltd with itself, that will provide a solid foundation to embark on a new journey of growth and profitability. However, success ultimately hinges on effective execution. Let’s take a peek into HDFC Bank’s approach to extracting value from HDFC Limited’s network, people, and customers

Game-changing balance sheet play: Mergers and acquisitions generally bring incremental benefits in terms of products, branches, and new business segments. But HDFC Ltd’s merger with the bank has not only created a giant but also brought a high-quality secured mortgage portfolio. HDFC Bank now has a balance sheet size of close to Rs 32 lakh crore, second only to the State Bank of India’s Rs 55 lakh crore as of March 31, 2023. ICICI Bank has a balance sheet size of Rs 16 lakh crore. Globally, the combined entity will be part of the top 100 banks in terms of assets. But a large balance sheet with a focus on India will provide the bank an opportunity to take on larger exposure on the wholesale side. The bank’s corporate portfolio has key segments like NBFC funding, power, oil and gas, and telecom. In addition, the production-linked incentive (PLI) schemes in as many as 15 sectors, as well as supply chain financing, have opened new opportunities in corporate banking.Gains additional scope to maximise returns in unsecured lending: The bank will now have a window open for doing more unsecured loans, especially personal loans and credit cards. The merger has resulted in the share of unsecured loans reducing from 30 per cent to 22 per cent of the total advances. Unsecured loans are high-yielding as compared to home and auto loans. In fact, the share of unsecured loans has been on the rise in both private and public-sector banks in the last 5 years. The bank is planning to offer pre-approved retail loan offers for HDFC Ltd customers. Given the salaried borrowers, the bank claims that these loans are safe with lowest delinquencies. High-tenor retail assets in the loan portfolio: In the last three decades, the bank has sold home loans manufactured by the parent HDFC Ltd. As a bank, it only focused on short-term retail loans. Take for instance, auto loans, with a highest tenor of 4 years, followed by personal loans with 2 years, two-wheeler loans with a year, and credit cards with the shortest tenure of a month. With long-term mortgages coming into the portfolio with over 20-year tenures, the average tenure of the bank’s overall loan assets has increased. This will bring more stability to the business operations, as the growing size of HDFC Bank requires more stability in the assets’ portfolio with long-term revenue-generating assets.Cross-selling opportunities for greater profitability: The bank now has access to the parent’s 45-plus years of expertise in mortgage origination and loan servicing processes. There is also a huge cross-selling opportunity, as prior to the merger, only a third of the bank’s 6,300-plus branches offered home loans. The banks will now offer home loans through a much larger network. In addition , only 2 per cent of its 70 million customers had taken a home loan from the parent company, HDFC Ltd. This offers a huge opportunity to tap existing customers for home loans. The bank’s CEO, Sashi Jagdishan, is planning to run mortgages in an integrated fashion by bundling them with retail products such as cars and personal loans, wealth management, insurance, etc.Specialised people with expertise in mortgages: People integration is often the biggest challenge in a merger because of duplication of work and different work cultures. This, however, is not a challenge. The parent firm has 3,900 specialised people compared to the bank’s 1.7 lakh employees. But these specialised people come with deep expertise in mortgages. These people could be a guiding force for training the bank’s workforce to sell mortgages. Similarly, the banking platform opens up a bigger canvas for them to sell other retail products.

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Mumbai, Oct 6 HDFC Bank Managing Director and Chief Executive Officer Aditya Puri has assured employees of the country’s largest private sector lender that their jobs and bonuses are secure.

Even as the COVID-19 pandemic rages on, Puri, who retires later this month, said the bank is doing well, has sufficient capital and does not have any strain in the loans that it has made. He also hinted that the bank may post a strong set of quarterly numbers in the recently ended July-September period and quarters ahead as well.

The COVID-19 pandemic has resulted in job losses, especially in the organised sectors, as businesses suffered due to economic activity coming to a halt in lockdowns. HDFC Bank and its private sector competitors have met hikes and bonuses commitments since the start of the pandemic.

“Not only are your jobs secure, your increment is also secure. Your bonus and your promotion are secure,” Puri told over 1.15 lakh employees of the bank, in a video message last week.

Puri, who has led the bank for over 25 years since its inception, said he is giving the assurance on behalf of the management team including his successor Sashidhar Jagdishan.

“The bank is doing well. We have all the capital that we need. Our portfolio is not under strain. We are aggressively using our distribution and technology advantage,” he said.

He urged employees to work as a team, follow the vision the lender has set out for itself and beat competition.

Puri was speaking ahead of the launch of festive offers by the lender in its second edition.

Competing banks have also launched similar aggressive offerings, eyeing larger share of transactions amid slowing consumption.

He said the bank has not accepted defeat in the face of the coronavirus outbreak and delivered good results for two quarters, and added that projections for the upcoming quarters also say the same.

Asking the employees to share messages about the festive offers on their social media handles and promised a 10-minute video chat with the employee securing the highest number of ‘likes’ on a post.

Source: PTI

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The Business Daily is North East India’s first Financial News Portal. This Pink Portal covers all big breaking news from the world of Business, Brands, Politics, Entertainments, Sports etc.

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http://www.thebusinessdaily.in

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