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RPT-BUZZ-India's IndusInd Bank climbs on reports of Kotak Mahindra takeover

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** Shares of private-sector lender rise as much as 4.1% to 633.3 rupees, mark sharpest daily rise since Oct. 6

** Larger rival Kotak Mahindra Bank, backed by Asia's richest banker Uday Kotak, is exploring a takeover of IndusInd Bank, Bloomberg first reported here on Sunday, citing people with knowledge of the matter

** All-stock deal being mulled by Kotak would create India’s eighth-largest financial firm by assets, boost Kotak’s assets by about 83% - report

** IndusInd, whose shares have fallen ~60% YTD amid worries over worsening asset quality and erosion of low-cost deposits, could get a lifeline from the deal, report says

** Macquarie Research says IndusInd Bank has earnings power, capital position to tackle asset quality issues comfortably

** A merger with IndusInd could be strenuous, time-consuming and could consume considerable management bandwidth for Kotak - Macquarie

** IndusInd’s promoter “completely denies” rumour, reaffirms “unstinted support” to the bank - emailed statement

** Kotak Mahindra Bank declines to comment; stock slips as much as 0.8% on Monday; down ~18% YTD, vs a ~24% slide in the Nifty Bank Index

** Around 7 mln IndusInd shares change hands by 0424 GMT, vs 30-day avg of 18.7 mln shares (Reporting by Chris Thomas in Bengaluru)

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