Kotak Mahindra and Axis Bank deny merger rumours

Investors on Thursday morning woke up to rumours of a possible merger between two major private sector banks, namely, Kotak Mahindra Bank and Axis Bank. However, both the banks denied any such possibility.

Hypothetically, if such a merger were to happen, the new entity could be worth Rs 2.5 lakh crore, making it the second most valuable Indian bank after HDFC. It is said that the rumour about merger was some shareholders' brainchild who wanted to tie the two huge synergies, as Kotak Bank has a strong corporate banking franchise while Axis Bank is strong on the retail front. 

Currently, the government holds 12 per cent stake in Axis Bank through Specified Undertaking of the Unit Trust of India (SUUTI), which is worth Rs 14,000 crore. It is presumed that the other private bank might be looking for a merger out of interest in picking up the government's stake of Axis Bank. The market capitalisation of Kotak Bank and Axis Bank is Rs 1.4 lakh crore and Rs 1.16 lakh crore, respectively. 

Kotak Mahindra Bank was trading up 0.3 per cent at Rs 770, after rising to the day's high of Rs 779.45, on the backdrop of a sharp fall in other banking stocks. The S&P BSE Bankex tumbled 0.9 per cent to 23,020.20 points. However, the stock of Axis Bank was down by 0.35 per cent, closing at Rs 485.8.