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Our Bureau

Mumbai, Sept. 17 With the shock waves from the Lehman Brothers debacle yet to subside, one of India’s largest private sector banks, ICICI Bank, is facing the heat as a result of its subsidiary’s exposures in the 158-year-old US investment bank.

The shares of ICICI Bank slid by more than five per cent on the BSE today, as rumours of top management selling their shares in the bank did the rounds of the market.

There was panic in the market, which led to heavy selling in the stock, said market men.

In a statement issued later, the bank denied the rumours of sale of shares by top management. The market sentiment was negative as the bank has close to $80 million of exposures in Lehman Brothers, said Mr Darpin Shah, analyst, Dolat Capital.

The bank also has exposures to other top global banks which, again, is a big concern, he added.

The country’s largest private lender ICICI Bank’s London subsidiary has a 57-million-euro (about Rs 375 crore) exposure to the failed investment banker.

ICICI Bank’s shares were down by more than 20 per cent over the past week, while they have slid more than 16 per cent in the past month.

A few months ago, insurance companies were buying ICICI shares, but today even insurance companies which have been buying substantially, are not willing to put their money into this stock, said the head of research of a broking firm.

The credit spreads for international banks have increased sharply over the last two months, which is likely to result in mark-to-market losses for ICICI Bank, says a research report from Edelweiss. The mark-to-market losses on the bank’s UK book could be in the region of $200 million, the report says.

ICICI Bank is very aggressive in terms of its operations, which helped it while it was growing at a very quick pace, but now, with a reversal of trends, it will be affected more, said the broking firm’s research head.

There are large FII holdings in the bank, because of which it got such a heavy premium and valuation in the market, but now the valuations of the bank will fall as FIIs are reducing exposure in it.

Deutsche Bank Trust Company America has a 28.88 per cent stake in the Bank, while Allamanda Investments has 7.61 per cent, Merrill Lynch 2.59 per cent, Government of Singapore 1.61 per cent, Growth Fund of America 1.23 per cent, Dodge & Cox International Stock Fund 1.16 per cent, Fid Funds Mauritius Ltd 1.03 per cent and CLSA Mauritius a 1.28 per cent stake, according the shareholding pattern on the BSE as on June 30.

More Stories on : Stocks | Private Banks | ICICI Bank Ltd

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