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IndusInd-ALF merger swap ratio fixed at 9:4

Mumbai, Dec. 26: The merger of Chennai-based Ashok Leyland Finance (ALF) with IndusInd Bank was approved today by boards of both firms. The share swap ratio has been set at 9:4 — nine IndusInd shares for four of ALF’s.

“The merger will provide the bank with an edge in retail lending and pave its way to add Ashok Leyland Finance’s Rs 2,000 crore portfolio comprising mainly two-wheeler and truck loans,” IndusInd Bank managing director Bhaskar Ghose said.

The private sector bank is likely to upgrade some Ashok Leyland Finance offices into bank branches and does not plan any retirement scheme to rationalise manpower in the immediate future.

The bank has limited presence in the retail-lending segment, while Ashok Leyland Finance has a strong retail assets base with around three lakh customers, Ghosh said. Both the entities are Hinduja group companies.

“This will provide the bank an opportunity to cross-sell retail products like credit cards to Ashok Leyland Finance customers,” Ghosh added.

He said, “The bank has no intention to upset the finance company's set-up and will continue to function to attain synergy.”

The bank would take a look at the finance company’s branch network. “In places where IndusInd does not have branches, we will like to make Ashok Leyland Finance’s branch as the bank's branch”, he added.

Ghose said the bank would review the lease asset portfolio of ALF and take a decision about its disposal or continuation.

“There are not many tax benefits for lease financing. We are, however, not emphasising on it,” he added. Besides synergy in the business, the bank balance sheet would also benefit from ALF’s Rs 235 crore reserves, he said.

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