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Even as market regulator SEBI came out with stringent norms on price sensitive issues on Wednesday, the stock market seems to have had wind of the landmark deal between Kotak Mahindra Bank and ING Vysya Bank announced on Thursday.
Shares of both Kotak Bank and ING Vysya Bank were on a roll for the last two days in anticipation of the deal. ING Vysya gained 11 per cent to ₹814 on Thursday from ₹728 recorded on Tuesday. Similarly, Kotak Bank jumped 6 per cent to ₹1,157 in the same period. Shares of both banks hit a 52-week high on Thursday.
Banks’ response In fact, ING Vysya Bank, in response to a clarification sought by the BSE, responded on Thursday morning, saying: “We are aware of the company’s disclosure obligations under Clause 36 of the Listing Agreement. The company will abide by its obligations to make appropriate disclosures as and when such disclosures are necessitated by decisions taken by the company.”
Similarly, responding to an NSE query on the news being flashed by certain TV channels on the deal, Kotak Bank said on Thursday morning, “No decision has been made by our bank in relation to any merger or acquisition transaction. If the bank takes a decision to undertake such a transaction, the same being unpublished price-sensitive information, the bank shall make a disclosure in accordance with Clause 36 of the listing agreement.”
Earlier this month, there were reports suggesting L&T Finance Holdings may buyout ING Vysya Bank. This rumour elicited a guarded response from L&T Finance Holdings.
Shriram Subramanian, Managing Director, InGovern said whatever regulation the market regulator brings in would not solve the purpose until it is implemented in letter and spirit.
“With the lengthy process of adjudication and a whole lot of loopholes, there is absolutely no fear of regulators in the minds of wrongdoers. SEBI should set one or two exemplary examples to prove that it can crack down on errant companies,” he added.
The US market regulator Securities and Exchange Commission has proved its might by booking even billionaire investors like Raj Rajaratnam, former hedge fund manager and founder of Galleon Group, he said. A similar move in India will not only protect market integrity but also instil fear in the minds of offenders, said Subramanian.
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