HDFC bank will now sign a memorandum of understanding with Chase for the partnership. The bank has already received Reserve Bank of India approval for entering into the MoU. "The basic underlying rationale for the new strategic business collaboration is to enable HDFC Bank to provide its customers a wide range of international banking products by leveraging Chase's global banking capabilities and branch network outside India," said an HDFC Bank press statement.

"The objective is to enable HDFC Bank to remain in the forefront of banking technology and product development with help from Chase. The collaboration would also provide the global clients of Chase broader access to local banking products and services throughthe capabilities and extensive branch network of HDFC Bank," it says.

NatWest is selling its 20 per cent stake in HDFC Bank following the group's decision to exit from Asia early 1998. The exact nature of Chase's future holding in HDFC Bank is still being worked out.

Currently, the NatWest group is in negotiations with the Indian Private Equity Fund, Mauritius (IPEF) and the Indocean Financial Holdings Ltd., Mauritius (IFHL) both funds advised by Indocean Chase Capital Advisors, for the possible sale of its equity stake in HDFC Bank, the press release said.

It further stated that "the bank's board expressed confidence that the proposed collaboration with Chase would give a further boost to the bank's efforts to provide their customers state-of-the-art banking products and services based on international service standards and would better position the bank in its mission of building a world class Indian bank."

NatWest group was given a 20 per cent stake in the bank, as a strategic alliance partner inMay, 1995, before the public issue by the bank. The 20 per cent stake was placed through two private placements of two crore equity shares each to two Mauritius-based Natwest group holding companies at the face value of Rs 10. According to the agreement while allotting the equity, Natwest was not to sell its stake for the first three years. The lock-in period expired on May 31.

Among all the banking sector scrips, HDFC Bank shares has the largest price earning multiple. HDFC Bank shares are currently traded at around Rs 60 at a price earning multiple of 22 times compared to other bank scrips which are quoted at multiples of below 10 times.