Search: Look for:   Last 1 Month   Last 6 Months   All time

ICICI Bank shares tank on rumours

National,Business, Mon, 06 Oct 2008 IANS

New Delhi, Oct 3 (IANS) 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 share price of the bank which closed at Rs.504.50 Wednesday fell to an intra-day low of Rs.498, a drop of Rs.46.95 or 8.51 percent, before recovering somewhat to finish at Rs.508.35, down Rs.43.10 or 7.82 percent from its previous close.

 

 

At close its share prices were still above the 52-week low of Rs.458 last week, which had prompted bank chairman M.V. 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 Rs.112 crore (Rs.1.12 billion),' Thunuguntla told IANS.

 

 

'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 percent 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 Rs.541 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.

 

 

'The only problem can be if there is a run on the bank, but then that would be a problem for any bank,' he said.

 

 

'Beyond a point, banks are all about confidence and if depositors lose faith and begin to queue up at the bank's counters to withdraw their deposits, any bank would be in trouble as nobody keeps more than 5 percent of its deposits in liquid cash,' he said.

 

 

'Thus, the rumours about ICICI Bank's vulnerability are nothing but rumours and have no basis in fact,' he said.

 

 

Following Friday's sustained bear hammering, it now remains to be seen what action the market regulator will take.

 


Read More: Delhi

LATEST IMAGES
Manohar Lal being presented with a memento
Manoj Tiwari BJP Relief meets the family members of late Ankit Sharma
Haryana CM Manohar Lal congratulate former Deputy PM Lal Krishna Advani on his 92nd birthday
King of Bhutan, the Bhutan Queen and Crown Prince meeting the PM Modi
PM Narendra Modi welcomes the King of Bhutan
Post comments:
Your Name (*) :
Your Email :
Your Phone :
Your Comment (*):
  Reload Image
 
 

Comments:


 

OTHER TOP STORIES


Excellent Hair Fall Treatment
Careers | Privacy Policy | Feedback | About Us | Contact Us | | Latest News
Copyright © 2015 NEWS TRACK India All rights reserved.