Mumbai, Feb. 21: Shares of Centurion Bank of Punjab (CBoP) today soared over 14 per cent on reports that it was in talks with HDFC Bank for a possible merger.

On the BSE, the CBoP stock closed at Rs 57.05 on a volume of over 1.58 crore shares as market players made a dash for the stock.

However, neither bank would confirm the merger talks. CBoP, in a communication to stock exchanges, said it did not comment on speculative reports, while HDFC Bank told the bourses that there was no such proposal at present before the bank board.

Unconfirmed reports say some of the existing investors in CBoP are looking to sell their stakes. Some of the major CBoP shareholders include Bank Muscat, Sabre Capital and Keppel Corp.

CBoP has a network of 400 branches in the country and 450 ATMs.

It is one of the banks in India to be involved in the few instances of consolidation in the domestic banking sphere. The Bank of Punjab was first merged into Centurion, followed by the Lord Krishna Bank.

The merger with Bank of Punjab gave Centurion Bank, which had growing retail assets, a base in north India in addition to a sizable SME and agricultural portfolio.

Similarly, Lord Krishna Bank gave it a good presence in the south, particularly Kerala.

HDFC Bank has a network of 754 branches and 1,906 ATMs spread across 327 cities. Its balancesheet now stands at over Rs 1,31,439 crore.

Industry observers said banks such as HDFC would be keen on expanding their presence, considering the developments that could unfold in 2009. Next year, the Reserve Bank of India could permit foreign banks to acquire domestic entities. At present, foreign banks that have operations in India are permitted to have only limited stakes in private sector banks.

“CBoP could then become a potential target of many foreign banks. Therefore, it makes immense sense to HDFC Bank to look at consolidation now, an analyst said.