Shares of Kotak Mahindra Bank were abuzz amid rumours and denial about a possible merger with Axis Bank.
The private sector lender was trading up 0.3% at Rs 770, after rising to the day’s high of Rs 779.45, against a sharp fall in most other banking stocks. The S&P BSE Bank index tumbled 0.9% to 23,020.20 points. Shares of Axis Bank too outperformed the bank index, down 0.35% at Rs 485.8.
Earlier today, media reports said that both the private lenders have denied the rumours of the possible consolidation move. A newspaper report had quoted an unidentified fund manager who had heard about the Kotak Bank and Axis Bank contemplating merging their businesses.
“The synergies (between the two banks) are huge. Kotak Bank has a very strong corporate banking franchise, while Axis is strong on the retail front,” the fund manager was quoted as saying. “The government, with a Rs 72,500-crore divestment target for next year, will look to offload part of its stake in blue chips it holds in SUUTI (Specified Undertaking of the Unit Trust of India). Under RBI directive, Kotak Bank’s promoters need to pare their stake in the bank to 15% by 2020 from 33.6%. A merger of the two could serve both these purposes,” the fund manager said further.
You may also like to watch:
Currently, the government holds 12% in Axis Bank through Specified Undertaking of the Unit Trust of India (SUUTI), and another 18% stake through Life Insurance Corporation and other state-owned insurance companies.
on the other hand, Kotak Bank’s promoters need to cut their stakeholding to 15% by 2020 from 33.6% to comply with the Reserve Bank of India’s directives.
While Axis Bank denied the rumour, Kotak Bank declined to comment. “Axis is one of the strongest financial institutions in the country with a large customer franchise. We urge you to exercise extreme caution in dealing with this misinformation,” an Axis Bank spokesperson was quoted as saying.