Axis Bank denies interest in the old-generation bank.
Less than a week after ICICI Bank announced its proposed merger with Bank of Rajasthan, another regional private sector bank is in the spotlight. Shares of Karnataka Bank closed short of a two-year high today on speculation that Axis Bank was interested in buying the old-generation private sector lender.
In response to a query from Business Standard, Axis Bank said “there is no truth” in the speculation.
On Monday, the Karnataka Bank counter saw brisk activity on both the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). On BSE, 4.72 million shares changed hands, more than five times the two-week average trading volume of 869,000 shares.
“There is a speculation that Axis Bank is buying Karnataka Bank,” head of institutional sales at a Mumbai-based broking firm said on condition of anonymity. Another Mumbai-based dealer corroborated the speculation.
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In a filing to BSE this evening, Axis Bank said, “Axis Bank Ltd has informed BSE that the bank understands that there are rumours about Axis Bank acquiring a regional bank. In the interest of investors, the bank clarifies that these rumours are completely unfounded and are not correct.”
Karnataka Bank Managing Director Jayarama Bhat said, “There are no talks at all. These are all false rumours.”
Axis Bank shares closed marginally higher at Rs 1,228.40, up Rs 7.90, or 0.65 per cent, on BSE. This was in line with the performance of the BSE Bankex, which ended up 0.75 per cent.
In the January-March quarter, Axis Bank picked up 1.19 per cent stake in Karnataka Bank, according to the shareholding pattern of the bank as of March 31. In the last two months, Karnataka Bank shares have gained 42.40 per cent.
The jump in Karnataka Bank’s scrip was similar to the spurt in Bank of Rajasthan’s share price on the day its merger with the country’s largest private sector lender, ICICI Bank, was announced. BoR’s scrip rose almost 20 per cent on the Bombay Stock Exchange on May 25, even though the announcement came two hours after trading had closed for the day. The Jaipur-based lender’s stock has nearly doubled over the past few weeks to Rs 164.35 at Monday’s closing.
Old private sector banks have been in the spotlight ever since the proposed merger of Bank of Rajasthan was announced. Most surviving old private sector banks are based in Southern India.