Rumours led to stock fall: Kamath

India's largest private lender, ICICI Bank today said it would continue to focus on its overseas business. The bank's managing director and CEO, K V Kamath, said the lender would continue to maintain a moderate growth in its balance sheet, while treading cautiously on the retail front.

“After raising capital last year, we have not grown our balance sheet significantly. There was a lot of criticism that we are slowing down on businesses and are less aggressive than we were earlier. At that point of time, it was rebalancing of the book with clearly looking at slowing down on the retail side of the Indian opportunity because we saw challenges on the horizon" said Kamath.

 

"As long as Indian businesses continue to be globalised, there is an opportunity and we will judiciously seek out investment opportunities there. At no point in time, we have tried to grow the book for the sake of growing the book,” added Kamath.

In the past few weeks, the bank’s stocks have taken a fair amount of beating over concerns of the lender’s exposure to overseas companies, which are currently underwriting huge losses.

"We are seeing malicious rumours without any basis at all and done in a consistent manner... So, clearly there is something much beyond…," Kamath said.

"We are clearly seeing concerted short-selling activities... We do not know who is responsible for this," he added.

ICICI Bank's share price has plummeted by nearly 15 per cent or more than Rs 100 per share in the past 10 days.

Yesterday, ICICI Bank's market value dipped below that of SBI. Its market capitalisation has dipped close to Rs 64,000 crore against Rs 100,000 crore for SBI.

The bank had earlier said that rumours were being spread that some of its top management officials were selling their shares. "These rumours are baseless and irresponsible, and no shares have been sold by members of top management of the bank during the current year," it added.

However, the impact of the collapse of iconic Lehman Brothers will be felt on the ICICI Bank as its UK subsidiary had an exposure of about Rs 375 crore in bonds of Lehman Brothers, the US-based investment banker.

Referring to the health of the ICICI Bank, Kamath said the bank had a capital adequacy ratio of 13.4 per cent and, having doubled the capital last year, it had not increased the operations by the same proportion.

"After raising capital last year, we have not increased our balance sheet significantly... We have not grown for the sake of growing the book. Having doubled our capital, we have not doubled our books. The growth of the book has been moderate," he said.

As regards the future strategy, he said, as long as Indian companies continue to globalise "we will judiciously look at the opportunities."

Answering questions on the impact of the global financial crisis, Kamath said Indian financial system was secured and was equipped to cope with what was happening in the rest of the world. "We are greatly insulated and lot of strength is inbuilt into the system", he added.

Referring to investment by its UK subsidiary, Kamath said, bulk of the money is invested in papers of commercial banks in the line with the regulatory requirements.

Wherever the investments are worrisome, he said, "we make a disclosure of them. We have invested in banks with good credit rating."

UK subsidiary of ICICI Bank has invested about Rs 375 crore in bonds of Lehman Brothers which has filed for bankruptcy protection in the US.

Answering questions on growth outlook, Kamath who is also the President of Confederation of Indian Industry (CII), said that mood in the recent CII's national council meeting at Bhubneshwar was "cautious" given the global financial crisis, declining value of rupee and rising interest rate.

This was in contrast to the "buoyant" mood which was witnessed three months ago among the members of the National Council, he added.