Karnataka Bank shares slip by 3% after ICICI Bank clarifies stock exposure

The shares of Karnataka Bank slumped nearly 3 per cent on Wednesday after top private lender ICICI Bank clarified that almost all shares held by it in the company were on behalf of equity broker clients as security.

The clarification came a day after Karnataka Bank saw its shares soar by nearly 9 per cent on Tuesday following its latest shareholding data showing ICICI Bank holding over 1 per cent stake in the company.

In its latest shareholding pattern filed with the BSE last evening after market closing, Karnataka Bank disclosed ICICI Bank having 1.09 per cent stake in the company as on March 31. The earlier quarter-end shareholding data, as on December 31, 2016, did not show any stake held by ICICI Bank.

This was seen by a section of the market as ICICI Bank having picked up the stake in its smaller rival.

In a clarification, ICICI Bank spokesperson, however, said in a statement that almost all these shares were held by the bank on behalf of equity broker clients for exchange clearing and settlement business.

"Some erroneous media reports have appeared that ICICI Bank has acquired 1.09 per cent stake in Karnataka Bank. We would like to clarify that almost all of these shares are held by the Bank of behalf of its equity broker clients as a security for our our exchange clearing and settlement business," the spokesperson added.

Karnataka Bank has often been the target of takeover speculation, which it has always denied. There was no official word from Karnataka Bank regarding the confusion over stake held by ICICI Bank.

Karnataka Bank shares had soared 9 per cent to end at Rs 159.30 on the BSE on Tuesday. During the day, it had zoomed 10.63 per cent to Rs 161.70 -- its 52-week high.

After opening with some gains this morning, the stock, however, took a plunge following the clarification from ICICI Bank and was trading nearly 3 per cent down at Rs 154.75 at the BSE.

ICICI Bank shares were also down nearly 1 per cent in an overall weak market.