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BL Research Bureau

The shares of the country’s largest private bank – ICICI Bank took a knock over the last couple of days on the back of the credit turmoil in the US. ICICI Bank has stated that its UK branch has exposure to the secured senior bonds of the recently bankrupt Lehman Brothers.

The bank had invested €57 million ($80 million) in Lehman Brothers. The market took the news negatively with the shares of ICICI Bank falling steeply.

The bank has stated that it had already provided for $12 million for these bonds and is expecting a 50 per cent recovery on these secured bonds. The bank may have to provide for the rest until such recovery.

Further, assuming that there is such a recovery, this may still lead to the bank absorbing the remaining $28 million losses.

The $28-million would translate to Rs 128 crore. This amount does not appear significant as a proportion of the company’s profits. ICICI Bank’s June quarter profits were Rs 728 crore.

The bigger risk for the company could lie in its exposure to instruments of the other US investment banks that are currently under pressure. ICICI Bank may be forced to mark down the value of such investments as well.

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

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