Morgan Stanley gets beat? A merger that is a threat to the big banks.

Thinking about the biggest banks in the world the likes of JP Morgan Chase, Bank of America, HSBC and Morgan Stanley come to mind. However, there is a new twist in the story. A new entrant that could be a threat to the biggest worldwide banks. This new behemoth arises from the land of India.

With an equity value of about $172 Billion, the $40 Billion deal will be a service provider to 122 Million people which is more than the population of Germany.

Since the time when the merger was announced first on April 4 last year, the shares of both the companies have seen a positive reaction with about 37 analysts calling it a ‘strong buy’. Effective July 13, the shares of HDFC shall cease to exist after the last June 30 meeting. Effective July 7, all Commercial papers of HDFC LTD will be transferred to HDFC Bank and as per the deal, HDFC shareholders will get 42 shares for every 25 shares held in HDFC Bank giving them 41% of the lender. All the required permissions by the regulators have been sought and as per Morgan Stanley, the deal will prove to be accretive in the first full year of operations. It, however, expects loan growth acceleration to drive 18 percent RoE by FY27.