HSBC may exit Karnataka Bank with sale of 4.46% stake

Global banking major HSBC is looking to offload its entire 4.46 per cent stake in private sector lender Karnataka Bank, after having exited from three other Indian lenders — Axis Bank, YES Bank and Federal Bank.

HSBC had invested in all these banks as a part of its investment portfolio and began selling these shares about three months ago.

This was part of a global exercise to shore up its capital by liquidating non-strategic holdings.

HSBC has garnered an estimated Rs 2,800 crore through sale of its shares in YES Bank, Axis Bank and Federal Bank, while its current holding of 8.34 million shares (4.46 per cent stake) in Karnataka Bank is worth about Rs 70 crore as per current market valuations.

Investment banking sources said the UK-based banking giant would soon look at selling its Karnataka Bank shares, which is held through one of its investment arms, HSBC Bank (Mauritius).

The shares are most likely to be sold through open market transaction, similar to the sale of shares in other three Indian banks.

While Axis Bank and YES Bank shares were sold on the same day earlier in June this year, HSBC sold its Federal Bank shares in late-August.

It had sold its holding of nearly five per cent stake in Kerala-based private sector lender Federal Bank for a little over Rs 341 crore.

Prior to that, HSBC had sold its 4.75 per cent stake in Axis Bank for about Rs 1,880 crore and its 4.76 per cent holding in Yes Bank for about Rs 545 crore.

Meanwhile, it may be recalled that HSBC has come under scanner in the recent past for allegations of inadequate control measures in the US against money laundering and terrorist financing related activities.

Certain Indian authorities, including Reserve Bank of India and Financial Intelligence, are also looking into the role of HSBC and another UK-based global banking major Standard Chartered for alleged lapses on their part.

While Standard Chartered has settled a case with the banking regulator of New York, which had charged it of secret transactions involving $250 billion with Iran, HSBC has also set aside $700 million to cover for any possible penalties against it in the US.

The two banks are being probed by some other regulators as well in the US.