India's IDFC First Bank slips, IDFC hits record high after merger approval

BENGALURU (Reuters) - Shares of private lender IDFC First Bank fell as much as 6% on Tuesday, while those of IDFC rose as much as 6% after the bank's board on Monday approved a reverse merger of the two firms in a bid to simplify their corporate structure and ease regulatory compliance.

Under the proposed deal, non-bank lender IDFC's shareholders will receive 155 shares of IDFC First Bank for each set of 100 shares they currently own in the former, valuing the deal at 127.02 rupees per share, a 16.3% premium to IDFC's last close.

IDFC stock hit an all-time high, while IDFC First Bank had its steepest intraday decline since December last year.

The merger announcement comes days after Housing Development Finance Corp merged with HDFC Bank in a $40 billion deal, the largest in India's corporate history.

($1 = 81.9550 Indian rupees)

(Reporting by Varun Vyas in Bengaluru; Editing by Nivedita Bhattacharjee)