Mumbai, Feb. 21: Shares of Axis Bank today rose five per cent on reports of a merger with another private lender even as it denied any such development.

Axis Bank on the BSE finished 4.99 per cent higher, or Rs 24, to end at Rs 504.60. During the day, it rose 5.88 per cent to Rs 508.90. Axis's shares on the NSE gained 4.84 per cent to close at Rs 504.35.

The bank's market valuation went up Rs 5,780 crore to Rs 1.2 lakh crore. About 10 lakh shares of the bank were traded on the BSE, and over one crore shares changed hands on the NSE.

The buying interest in the Axis counter came after a business news channel reported that Kotak Mahindra Bank has informally approached the government for a merger with Axis Bank. The Centre holds little over 12 per cent in the country's third largest private sector bank through the Specified Undertaking of the Unit Trust of India (SUUTI).

Meanwhile, in a filing to the BSE on Monday, Axis Bank denied any such development. "This has reference to our earlier letter dated February 9 wherein we had clarified on the baseless newspaper reports on a possible merger between Axis Bank and Kotak Mahindra Bank.

"In this connection please note that in light of repeated reports appearing in some sections of the media, we reiterate that the said news is baseless and unsubstantiated," Axis Bank said.

While the possibility of a merger between the two lenders has been doing the rounds, foreign brokerage CLSA said in a report that if the amalgamation did happen, the entity will be the largest private sector bank with a market cap of the merged entity of $40 billion.

Ministry view

The finance ministry has not received any communication with regard to the reported merger of the banks, a senior official said. Mergers of private banks do not come to the finance ministry, rather it is for the regulator to see, said another official.

"We are not aware of any such plans. We have not received any expression of interest for Axis Bank by any company," the official said when asked.

The government indirectly holds a stake in Axis Bank through public sector insurance companies and SUUTI.

SUUTI holds about a 12 per cent stake in Axis Bank, while the LIC has 14.49 per cent holding. The remaining promoter category stake is with four PSU general insurance companies and one state-owned re-insurer GIC Re.

Generally, the official said, the ministry doesn't comment on the SUUTI stake sale but at the moment there is no immediate plan to sell.

Kotak Mahindra Bank had acquired mid-sized private sector ING Vysya Bank in 2015 for about Rs 15,000 crore. The deal was touted as India's biggest banking merger.

The merger catapulted the nation's fourth largest private bank to nearly Rs 2 lakh crore balance-sheet size entity.