Shares of Federal Bank Ltd. experienced a significant decline on Tuesday, dropping by 4.49% to a low of Rs 341.80 on the BSE. This downturn followed the bank's official clarification regarding a news report that indicated a potential acquisition of Jana Small Finance Bank (Jana SFB) was in advanced stages.
Federal Bank's Official Stance
Earlier, CNBC-TV18 had reported that Federal Bank was actively pursuing the acquisition of a controlling stake in Jana SFB. The report also suggested that Jana SFB's promoter was likely to divest its entire 16.9% stake, potentially leading to an open offer by Federal Bank.
In response to these claims, Federal Bank issued an exchange filing, stating that while it "evaluates various opportunities in the ordinary course, for growth and expansion of its business," there was "no material event/ information that requires disclosure under Regulation 30 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015." This clarification was made under Regulation 30(11), which addresses news reports in mainstream media.
Market Reaction and Jana SFB's Performance
Following Federal Bank's statement, not only did its own shares fall, but Jana SFB also saw its stock decline by 1.96% to trade at Rs 570.45 apiece.
Despite Tuesday's dip, Federal Bank shares had shown strong performance in the preceding three months, rising by 20.45%. This contrasts with a modest 1.4% increase in the broader BSE Sensex during the same period. Jana SFB also recorded a substantial gain of 18.92% over the last three months, outperforming the BSE Financial Services index, which rose 3.25%.
Regulatory Compliance and Future Outlook
Federal Bank's adherence to SEBI's disclosure regulations underscores its commitment to transparency. While the bank continuously assesses growth opportunities, it emphasized that no definitive material event concerning a Jana SFB acquisition currently necessitates public disclosure. Investors will continue to monitor any further developments from both financial institutions.