Benefit from the Merger of IDFC Financial Holding Co and IDFC First Bank
By Team CodeForBanks | December 30, 2023
Reserve Bank of India (RBI) has given its nod for the merger of IDFC and IDFC Financial Holding Company with IDFC First Bank on December 18, 2023. This approval from the Reserve Bank of India marks a significant milestone in the journey of merging IDFC, IDFC Financial Holding Co. and IDFC First Bank being this the second biggest merger deal after HDFC Bank in the year 2023. Know that in the year 2018, IDFC Bank and Capital First got merged to form IDFC First Bank.
What is IDFC Bank Merger Ratio?
The merger ratio has been fixed at 155:100 as per Competition Commission of India (CCI). Therefore, in exchange for 100 shares of IDFC, 155 shares of IDFC First Bank will be issued. IDFC has a total stake of 39.93% in IDFC First Bank and this stake would be extinguished due to the merger. The absence of a dominant promoter improves the transparency and governance and also promote a level playing field for all shareholders.
After this merger, all the shareholders of IDFC Limited would become the IDFC First Bank Shareholders.
According to IDFC First Bank, the IDFC First Bank Merger will simplify IDFC FHCL, IDFC Limited and IDFC FIRST Bank by consolidating into one unit.
Key Benefits of the Merger of IDFC, IDFC Financial Holding Co and IDFC First Bank
This remarkable breakthrough opens the door to a series of potential benefits and transformations for IDFC FIRST Bank in the financial sector. Outlined below are the major benefits after said IDFC First Bank Merger 2023,
By merging the entities, the bank aims to combine their financial expertise which will help in creating its stronger presence in the competitive banking landscape. Like other sizable private sector banks, the combined entity will have a diverse mix of institutional and public shareholders without any promoter stake.
IDFC First Bank would create sustainable shareholder value in the years to come.
IDFC Bank has 809 branches and 925 ATMs across India as of March 31, 2023. As a single entity a IDFC First Bank would be able to get more focussed on strong deposit network, expansion in the product base, digital innovation, increasing profitability, customer friendly products and improved corporate governance.
Merger of IDFC FHCL, IDFC and IDFC First Bank is expected to contribute to the strategic positioning of the bank in the banking sector. A strong market position can open avenues for increased business opportunities, improved customer acquisition and powerful strategic alliances.
Optimization of resources and processes can result in cost savings and a more agile operational structure giving a positive impact on the bank's bottom line.