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ICICI in more trouble?

From Sify, in March 2008:

ICICI Bank’s investments in credit derivatives could be four times previous estimates at $6 billion, analysts said on Wednesday. Budget 2008-09

“ICICI Bank has clarified that there is some more exposure at its 100 per cent owned international subsidiaries. In fact, its total exposure works out to $6 billion ($2.2 billion in credit derivatives and the rest in fixed income instruments),” Morgan Stanley’s Anil Agarwal, Anil Bang and Mansi Shah, said in a note to clients.

The trio warned that though the underlying credit quality on these instruments remains strong, ICICI’s mark to market losses could rise as global credit conditions are likely to worsen.

“ICICI Bank’s subsidiaries in the UK and Canada have invested $500 million in credit derivatives and taken a loss of $35 million as of January. Moreover, they have a fixed-income book of $3.8 billion, which is a bit out of money,” Agarwal, Bang and Shah said.

I don’t know if the $6 billion estimate is ICICI’s – the article indicates it is that of the analysts, which I wouldn’t quite trust. But if it’s true, the markets have actually tanked more, and fixed income market values are down due to rising interest rates everywhere.

Another interesting bit is this:

The ICICI Bank stock shed 1.15 per cent on Wednesday to end at Rs 960.

Interestingly, not a single analyst has yet given a ‘sell’ call on the share. Most of them have retained their 12-month price target between Rs 1,300 and Rs 1,550.

JP Morgan analysts Sachin Sheth, Sunil Garg and Amit Premchandani said at current valuations, the stock remains attractive.

“We believe it is time to buy at these very cheap valuations, given upcoming branch openings, medium-term improvement in low-cost deposit mix, tapering off of non performing loans, and bottoming out of retail growth,” they wrote.

Current quote for ICICIBank: Rs. 530. Can’t trust predictions.

  • px says:

    >Most Big names never give sell calls.. Hasn’t that happened before during the tech bust not just here but in Us too prompting a shakeup in the big consulting firms ?

    Where do you see financials and the mkt in gereral especially after 22 and 29th? do u expect a further fall from these levels to 10000+ as u had said before ?

  • Deepak Shenoy says:

    >px: Yes, true – there’s just no accountability.

    Financials wise: Yes I still see a move to 10K but I honestly don’t expect it to be a fast move as we have done a lot of damage going down. Should be a very slow grind.

    The short term has some fast moves but in either direction thogh we are and have been ripe for a bounce up. S’waht I think, take with pinches of salt – and my trades being automated, may do something entirely different….

  • Rajandran says:

    >US markets are recovering due to strong financial results with strong belief that credit crisis has been over. Will it continue in indian markets too?

  • Mahendra Naik says:

    >Most analyst’s predictions involve simply extrapolating trends, both on the way up and down. I think long term investors ought to look at markets dispassionately and not get distracted by random noise emanating from TV channels.

  • Siddharth says:

    Its only ‘belief’ for the time being. Wait and watch IMHO.
    All ‘belief’ pumped by FED and SEC. Mr Bernake SHALL go at any extent printing money.

    Indymac Bank, Fannie Mae, Freddie Mac are the latest victims of the crisis. I dont know if its over or not but I cant stop suspecting that it is not yet over.

  • Niladri says:

    >ICICI Bank Negligence.


    Guys, we all know that the ICICI Bank is one of the best banks in the country. But how many of us know that many people are suffering because of ICICI Bank negligence.

    Please read it carefully and stop banking with ICICI Bank.

    • XXX tried to open a DMAT A/C with ICICI Bank.
    • ICICI Bank says – it normally takes 15 days to open a DMAT A/C.
    • For XXX it took around 40 days with many calls to the bank.
    • Account opened at last but the welcome kit did not reach to XXX. Only he got few passwords by normal post.
    • One day XXX is in office and gets a call from the ICICI Bank currier guy to receive some kit.
    • No way can XXX come back to home to receive it. So the Kit goes back to Bank.
    • XXX goes to nearest ICICI Bank, which is far away from XXX’s home to get the welcome kit.
    • But the kit is not the DMAT kit but the Savings A/C kit which XXX had to open along with the DMAT.
    • Still no trace of DMAT A/C. The passwords XXX got long back is with XXX and for more than 15 days and feared expired because of no implementation.
    • Finally after many long phone calls and many requests, ICICI Bank sends 3 booklets kind of thing with DMAT A/C printed on it.
    • XXX tries to open the DMAT A/C but since the passwords were not used for more than 15 days they were inactive by then.
    • XXX again calls ICICI Bank to send a new set of passwords.
    • Password reach to XXX, all good.
    • XXX deposits 5000/- to ICICI Savings for DMAT trading.
    • XXX now happily tries to open DMAT and tries to trade.
    • Alas!! No success, DMAT A/C says PAN details not available with local ICICI Bank and XXX cannot do trading.
    • XXX cannot stand with this. Already ICICI Bank deducted some amount form XXX savings for some strange reasons.
    • XXX issues an ICICI check for Rs. 2000/- in favor of a Credit card, let’s use 5000/- to pay the credit card bills.
    • The check is cleared.
    • The remaining amount should be 3000/-.
    • XXX issues another ICICI bank check for another Credit Card. This time, lets pay the remaining full amount left (3000/-) in ICICI Bank, to the credit card.
    • The check got bounced.
    • Credit Card Company calls XXX and informs the check bounce.
    • XXX calls ICICI bank and finds out that ICICI bank, without informing XXX, has blocked some amount from the remaining (3000/-) for the DMAT account, the DMAT, that never worked at all.
    • XXX starts fighting with ICICI Bank.
    • After almost 4 to 5 months, XXX gets an answer from ICICI bank that the amount blocking has done by XXX himself. XXX is surprised, the DMAT that never worked, how and why XXX would block some amount and let the check bounce.
    • Since there is a check bounce reflecting in the credit Card statement XXX is now in a problem. XXX cannot use this statement for any loan or any other credit card for 6 months form now, because the banks have started calling other banks to know if there is any delay in payment before issuing any Credit card or loan.
    • ICICI Bank is blaming XXX for all the problems.

    You may understand this story or may not. But keep away from banking with ICICI Bank.

    Please forward this mail to all Indians and as many people as possible. Let them know just because some negligence how people suffer. It is our money which bank use to make money but never hesitates to blame us if things are not straight.

  • Amit Khanna says:

    >I have a close friend who works as a AGM with ICICI. As per feedback, ICICI Bank in heading the ENRON way. The asset liability mismatch has become glaring and people are pulling out there money. There is even a news that ICICI may put a withdrawl cap from SB Accounts from Feb 1 09. Suggest, pl withdraw your monies before it gets too late..