ICICI Bank to repatriate capital from Canadian arm for second time

Writes to Canadian government's agency OSFI seeking permission

ICICI Bank, the largest private sector lender in the country, has initiated the process of repatriating capital from its Canadian arm for the second time in as many years. The bank is also planning to optimise the capital invested in its United Kingdom subsidiary.

“The bank and its UK and Canada subsidiaries also continue to work towards optimising the capital invested in these subsidiaries. ICICI Bank Canada has made an application to the Office of Superintendent of Financial Institutions, or OSFI, seeking approval for a second round of capital repatriation,” NS Kannan, executive director of ICICI Bank, told analysts during a recent interaction.

OSFI is an independent agency of the Canadian government. It was established in 1987 to contribute to the safety and soundness of the Canadian financial system. OSFI supervises and regulates federally registered banks and insurers, trust and loan companies, as well as private pension plans subject to federal oversight.

ICICI Bank Canada had repatriated 75 million Canadian dollars (C$) in 2013-14 (April-March). The bank's UK arm had repatriated $100 million in the previous financial year.

The uncertain global macroeconomic environment, strict regulations and limited overseas growth opportunities have turned Indian banks less enthusiastic in expanding their businesses outside the country in recent years. ICICI Bank's total equity investment in UK and Canada arms has been reduced from about 11 per cent of net worth to seven per cent between March, 2010, and March, 2014.

The private lender has also announced its decision to sell its shareholding in ICICI Bank Eurasia (its Russian subsidiary) to Sovcombank, subject to execution of definitive agreements and regulatory approvals. The transaction is expected to conclude by the end of March this year. Kannan said the bank's subsidiaries in UK and Canada will continue to focus on short-term loans, working capital lines, trade and transaction banking products to multinational corporations, select local market corporates, subsidiaries and joint ventures of Indian companies. The subsidiaries will also participate in syndication transactions. Additionally, ICICI Bank Canada will continue to grow its securitised insured mortgages portfolio.

“We expect that the approach to lending in ICICI Bank UK and ICICI Bank Canada will also yield synergies for the clients’ Indian banking requirements,” Kannan said.