HDFC Bank plans to raise about Rs 4,000 crore to fund global expansion amid heightened buzz that the bank may acquire mid-sized Centurion Bank of Punjab (CBoP).
?We plan to open some foreign branches for which we will require the capital. We will be opening our first overseas branch in Bahrain in 2-3 months,?? said Sudhir Joshi, head of treasury at HDFC Bank.
The bank may also open branches in Hong Kong and London.
The bank would raise capital from abroad under a $1-billion medium-term notes (MTN) programme. Standard & Poor?s has assigned lowest investment grade ?BBB-? to the senior debt portion of the MTN programme.
?We will raise this capital in different tranches, through different instruments, as and when required,? Joshi said. ?We may look at raising these funds as upper Tier II bonds since we have enough headroom available there,? he added.
Meanwhile, television channels on Thursday reported that the bank might be in advanced merger talks with CBoP. When contacted, a top CBoP official told FE, ?This is mere speculation. While CBoP is open to mergers and acquisitions in order to expand its horizon, we will let you know at the right time.? The official did not wish to be named.
In the past, CBoP has been a very active player in consolidation. The previous two mergers with Bank of Punjab and Lord Krishna Bank have been successful.
Centurion Bank of Punjab?s current market price is around Rs 50-Rs 51 and a deal with HDFC Bank could be at a reasonable premium to the current market price, said the report by CNBC-TV18.
CboP?s major shareholders include Bank Muscat, HSBC Finance and Sabre Capital, with Bank Muscat having the highest stake of 14%.
CBoP?s shares on Thursday surged 14% as talk of a merger with HDFC Bank gained momentum. The shares closed at Rs 57.05, up 14.44%, while the HDFC Bank stock settled 0.55% up at Rs 1,542.90 on the BSE.
HDFC Bank was not available for a comment on a possible merger.
