ICICI Bank | ICICI Shares Drop 14 pct as banks mauled
MUMBAI (Reuters) - Shares in ICICI Bank, India’s second-biggest bank, fell nearly 14 percent to a two-year low on Monday, hurt by foreign fund selling and worries about the impact of the global credit problems. By 0925 GMT, the shares were down 11.2 percent at 498.20 rupees, taking their losses to more than a quarter this month and 60 percent this year. “Wherever there was FII ownership, the correction is happening,” said Jayesh Shroff, a fund manager at SBI Mutual Funds, referring to foreign institutional investors (FII). “There are lots of rumours floating too, but I don’t think the problems for Indian banks are so big that they can collapse,” he said. Foreign ownership in ICICI was close to 70 percent, according to stock exchange filings, with shareholders including Singapore state investor Temasek and the Government of Singapore Investment Corp (GIC). In a Sept. 2 report, Morgan Stanley listed ICICI at the top of Asian banks most exposed to a downturn in markets. Two weeks later, ICICI said it had exposure of about $81 million to Lehman Brothers senior bonds and would need to increase provisions by about $28 million to cover half that. Broker Edelweiss Capital has said it expected ICICI to post $200 million in losses on bonds, including Lehman-issued debt. Both the bank’s joint managing director and the chief executive responded to market worries about ICICI’s exposure to the credit turmoil by going on television earlier this month to say the bank was extremely healthy and had ample capital. A spokesman for ICICI said the bank planned to launch advertising campaigns in some regional media to tell customers the bank was not facing any difficulties. “Basically, we need to clear all confusion. The campaign should roll out in the coming weeks,” Charudatta Deshpande said. The Mumbai Stock Exchange’s bank sector sub-index was down 6.2 percent on Monday, and has fallen 46 percent so far this year. The benchmark BSE Sensex index was off 3.7 percent. |
September 30, 2008
Dear Sir/ Madam,
We greatly value your relationship with us. In the context of the developments in the international financial markets, we thought it pertinent to bring to you our perspective of the prevailing situation.
We would like to bring to your attention that the Indian banking system is well regulated and significantly insulated from global developments. This is because it is mandatory for all Indian Scheduled Commercial Banks to retain 34% of the deposit base in the form of Government Securities (SLR) and cash with RBI (CRR). Besides, sound policies of RBI have ensured prudent credit practices in the Indian Banking system.
ICICI Bank is already compliant with the BASLE II requirement in respect of risk management practices and capital adequacy. At 13.4%, ICICI Bank has one of the highest capital adequacy ratios in the Indian banking industry. Last year, ICICI Bank raised Rs. 20,000 crores (US $ 5 billion) of equity capital, which almost doubled our equity capital base. We have a net worth of over Rs. 47,000 crores (US$ 10 billion), again one of the highest in the banking industry in India We have consolidated total assets of over Rs. 4,84,000 crores (over US $ 105 billion), which is diversified across a wide range of asset classes across retail, wholesale and rural banking.
ICICI Bank is amongst the most profitable banks in India. In FY 08, ICICI Bank made a profit of Rs. 4,158 crores (US$ 900 million).
ICICI Bank has the highest credit ratings in the Indian financial sector. We have AAA ratings for our instruments, such as senior bonds, subordinated bonds, and deposits. We have the highest foreign currency bond ratings assigned to any Indian bank from Moodys and S&P.
We continue to invest in growth, indicating our confidence in the opportunities in the Indian market. In 07-08, ICICI Bank added 650 new branches, taking the total strength to over 1400 branches.
We thank you for reposing trust in us over the years. We look forward to setting new benchmarks in service levels in India and to create a bank that you will continue to be proud of.
As a testimony to the above, please find below the clarification given by Reserve Bank of India.
Date : 30 Sep 2008
RBI Statement on ICICI Bank’s Financial Position
There are reports in some sections of the media that based on rumours regarding the financial strength of ICICI Bank, depositors are withdrawing cash at its ATMs and branches in some locations.
It is clarified that the ICICI Bank has sufficient liquidity, including in its current account with the Reserve Bank of India, to meet the requirements of its depositors. The Reserve Bank of India is monitoring the developments and has arranged to provide adequate cash to ICICI Bank to meet the demands of its customers at its branches/ ATMs.
The ICICI Bank and its subsidiary banks abroad are well capitalised.
Alpana Killawala
Chief General Manager
Press Release : 2008-2009/412
Sincerely,
Uma Lakhani
Office of Head Service Quality
ICICI Bank Ltd.