New Delhi: The Indian banking sector saw a mark-to-market losses of around Rs400 crore due to their investment in instruments of troubled US financial giants like Lehman Brothers and AIG, 75% of which is accounted by ICICI Bank alone.
“In terms of MTM losses of the banking sector including private sector, stood at Rs410 crore owing to financial crisis in some of financial institutions. Of this, ICICI Bank alone has MTM loss of about Rs309 crore,” a senior Finance Ministry official said.
MTM is based on the market value of underlying securities and keep varying. MTM is a notional loss but it would be reflected in the balance sheet.
Besides, some state-owned banks had exposure in the instruments of these troubled US financial institutions to the tune of Rs234 crore.
“Exposure of a few public sector banks to credit-linked and floating rate notes of Lehman Brothers and other troubled institutions is about $52 million,” he said.
In his first reaction after the collapse of Lehman Brothers and the bailout of the largest US insurer AIG, Finance concerned, in which the government is a majority owner, he had said that they didn’t have any ‘undue exposure’.
“In fact, many of them have no exposure at all. Whatever exposure they have are in accordance with RBI’s prudential guidelines,” he said, adding that ICICI Bank had some exposure which it has disclosed.
The London subsidiary of ICICI Bank had $80-million exposure in the senior bonds of Lehman Brothers.
ICICI Bank Joint Managing Director Chanda Kochhar had said the investment by the subsidiary constitutes less than one per cent of the total assets of the subsidiary and less than 0.1% of the consolidated total assets of the ICICI Group.
On 30 June, 2008, ICICI Bank and its subsidiaries had consolidated total assets of Rs484,643 crore.
The Finance Minister had said while the country’s banking system was reasonably insulated from the global crisis, the credit crunch could have some effect in India as well.
“If there is a credit crunch in the rest of the world, it will, to some extent, impact the credit availability in Indian market. RBI, day before yesterday, took steps to provide liquidity to the banks,” he said.