Share prices of India's largest private bank, ICICI Bank, tanked nearly 10 percent on Indian equities markets Friday on sustained bear hammering based on unconfirmed rumours of it being hit by the global financial turmoil before recovering somewhat by close.
“The rumours are baseless because ICICI Bank has enough depth and solvency to withstand even a complete write-off of all its doubtful exposure either in India or abroad,” said Jagannadham Thunuguntla, head of the capital market arm of India’s fourth largest share brokerage firm, the Delhi-based SMC Group.
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Oman Tribune Oct 3, 2008 - ICICI Bank Shares Tank 7
1. ICICI Bank shares tank 7.8% on rumours
NEW DELHI Shares of India’s largest private bank, ICICI Bank, tanked nearly 10 per
cent on Friday on sustained bear hammering based on unconfirmed rumours of it being
hit by the global financial turmoil before recovering somewhat by close.
The share price of the bank which closed at Rs504.50 on Wednesday fell to an intra-day
low of Rs498, a drop of Rs46.95 or 8.51 per cent, before recovering somewhat to finish at
Rs508.35, down Rs43.10 or 7.82 per cent from its previous close.
At close its share prices were still above the 52-week low of Rs458 last week, which had
prompted bank chairman MV Kamath to call for an investigation of its share price
movement by the market regulator Securities and Exchange Board of India (Sebi).
The continuous selling pressure that the bank is facing is despite Kamath declaring a few
days back that the bank was safe, and which India’s central regulator, the Reserve Bank
of India, has also endorsed.
There have been rumours floating for some time that the bank will be hit by the global
financial meltdown.
“The rumours are baseless because ICICI Bank has enough depth and solvency to
withstand even a complete write-off of all its doubtful exposure either in India or
abroad,” said Jagannadham Thunuguntla, head of the capital market arm of India’s
fourth largest share brokerage firm, the Delhi-based SMC Group.
“ICICI Bank’s actual exposure to Lehman Bros net of provisioning is a meagre $28
million or about Rs1.12 billion (Rs1.12 billion),” Thunuguntla said.
“It has no exposure to Washington Mutual which is the only other financial institution
that has been liquidated and so its exposure to other troubled institutions is not really in
danger of being wiped out,” he said. “The bank’s net worth is $11.7 billion, so the
threatened amount is only about 0.03 per cent and that is negligible,” the analyst said.
“The bank’s total foreign loans and advances is, however, as is to be expected, largest
among Indian banks at about Rs541 billion or about $13.5 billion. So, unless its entire
foreign portfolio or a substantial part of it is wiped out, ICICI Bank should have no
problems at all,” Thunuguntla said.