India is now home to the world’s fifth largest bank by market capitalization

Housing Development Finance Corporation (HDFC Ltd) and its subsidiary HDFC Bank completed their merger, forming the world’s fifth largest lender by market capitalization, valued at over US$170 billion.

The merger combines India’s top private sector bank and the country’s largest mortgage lending company, solidifying their position among the world’s leading financial institutions.

HDFC Bank’s market capitalization of US$116.37 billion is now joined by US$63.8 billion from HDFC Ltd, as the Bombay Stock Exchange (BSE) reported.

The merger becomes effective immediately, with a designated “record date” of July 13 for HDFC shareholders to exchange their shares for HDFC Bank shares.

HDFC Bank CEO Sashi Jagdishan expressed confidence in the merger, calling it a significant milestone that would enable them to create a comprehensive financial services ecosystem.

With a combined market capitalization of over US$170 billion, the newly formed bank’s value is exceeded only by JP Morgan & Chase and Bank of America in the United States and China’s ICBC and China Construction Bank.

The announcement of the merger in April 2022 initially raised doubts, leading to an 18% decline in share prices for both entities.

However, in recent weeks, shares of HDFC Bank (+7.5%) and HDFC Ltd (7.67%) have shown positive growth ahead of the merger’s official completion.

The merger aligns with regulatory changes by the Reserve Bank of India (RBI), which has facilitated mergers by lowering barriers for banks and non-banking financial institutions.

HDFC Bank currently operates over 7,800 branches and nearly 20,000 ATMs across 3,800 locations, while HDFC Ltd has 651 branches.

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