Mumbai: ICICI Bank said that rumours being repeatedly circulated about its financial strength were baseless and malicious, saying the bank had a strong capital position.
Chief Executive K.V. Kamath said in a statement that the latest in a string of announcements the bank has issued about its health in the past two weeks, that ICICI’s banking and non-banking units were well capitalised.
“ICICI Bank Ltd is aware that rumours are being repeatedly circulated in certain centres regarding the financial strength of the bank. The bank states that there rumours are baseless and malicious,” Kamath said.
Shares in India’s leading private-sector bank were up 1.3% at Rs499.5 after opening down 7.2% their lowest since June 2006, thanks to heavy buying by domestic funds and institutions. The broader market was down 0.5%.
“The absorption of the impact of current market conditions on investment portfolio valuation will not pose any challenge to ICICI Bank’s capital position,” said Kamath.
“The bank’s capital adequacy ratio was at 13.14% on 30 June and it had a net worth of more than $10 billion,” he said.
Shares in ICICI have fallen by more than 25% in September and almost 60% so far in 2008 on worries about its exposure to global financial turmoil.
In response to concerns about its exposure to markets and the financial health of the bank, ICICI has issued a number of statements since mid-September.
On 16 September, it said that it had an exposure of about $81 million to Lehman Brothers senior bonds and would raise provisions by $28 million cover half that.
Broker Edelweiss Capital has said that it expected ICICI Bank to post $200 million in losses on bonds, including Lehman debt.
On 17 September, ICICI issued a statement saying rumours that top management were selling shares were baseless and irresponsible.
The bank’s joint managing director and Kamath appeared on television on 18 and 19 September respectively, saying the bank was extremely healthy and had ample capital, after market worries had grown about ICICI’s exposure to the credit turmoil.
The bank on Monday said that its UK unit had no exposure to the U.S. sub-prime credit and 98% of its non-Indian investment was rated investment grade by rating agencies.
“The unit had a total balance sheet size of $8.5 billion, with $3.5 billion constituting its non-India investment book,” ICICI said.