DCB merging with larger bank - impending action
After the recent Centurion Bank of Punjab merger with HDFC Bank, there are talks that Development Credit Bank, a mid-sized private sector bank may merge with a larger private sector or a foreign bank before 2009.
Though the move has been denied by the company’s management, but one thing that emerges out is that they are looking to scale up their operations and without consolidation, same would be almost impossible to achieve.
To carefully put it, the bank says is would like to ‘merge’ rather than ‘get acquired’. By this they would mean that they can acquire few small banks to enter into big league bank.
But for a bank which broke even just last year, it would be a tough task to achieve its aim and take on big league banks who already have a formidable presence across the country.
There were even talks of HDFC acquiring DCB, which has been denied strongly saying that HDFC 2.32% stake in the bank is just financial investment and not a strategic one.
Earlier, Tata Capital had picked up a stake in DCB fuelling speculation of a takeover.
But post 2009, with big stakeholders in DCB like The Aga Khan Fund, Citibank, Morgan Stanley, Lehman Brothers and Merrill Lynch having substantial stake in the bank, the interest in bank would certainly increase giving rise to possibility of a merger.
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The trend has started to with Bank of Punjab and Centurion Bank merging, Now its turn of DCB to merge with a bigger bank than it.
The small efficent private banks may be aquired by foriegn banks.
This trend is likely to start in PSU Banks. Instead of having n number of banks on one road, its time to consolidate in Banking Sector.
So ultimate benificary is the consumer, get ready for good service from the private as well as PSU banks, as the competetion will severe in the banking sector.