ICICI bank sends Indian shares plummeting
Sep 29, 2008 | Comments 1
Indian shares tumbled almost 4 percent on Monday amid fears that the European financial institutions could be the next victim of the credit crisis following the collapse of Wall Street taking four last US banks.
ICICI Bank Ltd the number one private lender led the declines, falling 12.1 percent to 493.30 rupees. In mid-market hours ICICI made a statement saying that its UK subsidiary has no exposure to American sub-prime credit.
The Bombay Stock Exchange’s benchmark 30-share Sensitive Index plummeted 506.43 points or 3.87 percent to 12,595.75, although earlier days trading was at the lowest for a year and a half at 12,402.84 points.
On Monday The UK government authorised the sale of Bradford & Bingley branch network to Spanish banking giant Santander and the rest of the group will be nationalized. The Dutch, Belgian and Luxembourg governments rescued Fortis the large financial firm preventing a spread of failure as credit crisis concerns engulf the world.
Hypo Real Estate Holdings A.G. the German lender signed a last-minute deal with the government and a consortium of banks to aid in the financial strain and Iceland’s government brought a 75 percent stake of Glitnir Bank after the lender’s funding position declined.
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Filed Under: Business News
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,
Rakesh Sah
Office of Head Service Quality
ICICI Bank Limited