CBoP's merger to strengthen HDFC; S

New Delhi, Feb 25 (UNI) An international rating agency today said the proposed merger of Centurion Bank of Punjab (CBOP) with HDFC Bank is likely to strengthen the latter's business profile as Centurian has a good financial profile.

The boards of the two banks, on Saturday, gave their in-principle approval for the merger, paving the way for the country's biggest amalgamation in banking sector reportedly with assets of over Rs two lakh crore.

''Despite Centurion being about one-fifth of HDFC Bank in terms of balance sheet size, the latter's business profile is likely to be strengthened by the merger as Centurion has a good financial profile,'' Standard&Poor's said.

The banks' boards are scheduled to meet on February 28 to consider the merger and the draft scheme of amalgamation. Merger, if approved, however, would be subject to the necessary regulatory approvals.

S&P's said merger is expected to strengthen HDFC Bank's distribution network--and hence the bank's market position--especially in Punjab and Kerala.

This deal will add 394 branches and 452 ATMs to HDFC Bank's existing 754 branches and 1,906 ATMs.

The rating agency said likely capital infusion by a preferential offer of shares to its promoter, HDFC, will further bolster HDFC Bank's capitalisation.

While stating that its ratings and outlook on HDFC Bank(BBB-/Stable/A-3) will not be immediately affected by announcement of the proposed merger, Standard&Poor's said it will continue to closely monitor the progress of the merger and integration plan.

''If the deal is likely to materially weaken HDFC Bank's credit profile, the ratings or outlook on the bank could be negatively affected,'' it added.

UNI SAA BJR RN1806