The Hindu Business Line : Overseas exposure by most Indian banks insignificant

Mumbai, Sept. 18 When ICICI Bank said it had an exposure of €57 million (approximately $80 million) in the senior bonds of Lehman Brothers, analysts were wondering what its total exposure in overseas instruments could be.

Their question was answered when the Joint Managing Director of the bank, Ms Chanda Kochhar, told television channels that the bank’s total exposure was $3 billion in overseas instruments. This is 4 per cent of the bank’s total balance sheet, she said. However, barring ICICI Bank, the foreign investments of most Indian banks with substantial overseas operations is not very significant.

ICICI Bank’s investment in Lehman bonds is through its UK subsidiary ICICI Bank UK Plc and the bank has made a provision of about $12 million against investment in these bonds, and would make an additional $28 million provision.

In the case of other Indian banks such as State Bank of India, Bank of Baroda and Bank of India, the overseas exposure is more in the form of advances and not so much as investments in instruments such as Government securities, shares or bonds, said a banking analyst with a broking firm.

ICICI Bank is the only one which has significant investments in other instruments. Therefore, it is likely to see more marked-to-market losses when compared with its public sector counterparts, the analyst said.

SBI exposure

A senior official from SBI said that the bank has fully provided for its exposure of $5 million to the Floating Rates Notes of Lehman Brothers. Part of this was in the first quarter of this fiscal and part of it subsequently. “We have not increased our overseas investments in this fiscal so far. The bulk of our investments is in repoable or statutory securities for liquidity requirements or for statutory requirements,” he said.

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