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Bank stocks turn lukewarm

Our Bureau

MUMBAI, Dec. 14

THE euphoria of the latest bank merger appears to be wearing off. Bank stocks, which had been climbing all week, already seem to be running out of steam generated by the merger of Bank of Madura with ICICI Bank. Talk that many other old private sector ba nks were sitting ducks for prowling predators too had fuelled interest in bank scrips.

Punters who had taken positions in old private sector banks have started booking profits, according to analysts. ``How long can a news like that sustain a rally? It had to wear off,'' said an analyst.

The scrips of many private sector banks that were being perceived as takeover targets have started heading down. Vysya Bank, that had shot up to Rs 141.60 over the week, today declined to Rs 130.30. Federal Bank moved up from last week's close of Rs 52.5 5 to Rs 63.45 yesterday, but weakened today to close at Rs 60.05. Centurion Bank, another ``potential target'', had moved up from Rs 17.20 to Rs 19.50 yesterday. However, it too came down marginally today to close at Rs 19.10.

Some strong public sector bank stocks that also got a boost on talk of reduction of Government equity, seem to have settled. Bank of Baroda lost Rs 0.65 today to close at Rs 48.40. Corporation Bank, which had gone up from Rs 84.85 last Friday to Rs 89.35 yesterday, came down marginally to close at Rs 89.20.

Analysts feel that another takeover is not probable immediately. Most of the banks that are seen as takeover targets are known to have been in talks with larger banks over the past few months.

Most of the new private sector banks are now in the process of consolidating their positions and ``carving out a niche'' in their areas of business. Most of them are also concentrating on organic growth.

Analysts say that banks looking for acquisitions typically look at the geographical reach, automation levels, employee strength etc. of the target bank. They say that now they may wait for ``targets to get into shape'' before they acquire them.

The `targets' have also realised that and are trying to tone themselves up and look attractive to potential buyers. And they know that just make-up and perfume will not do.