Since the day Lehman Brothers declared Banruptcy, there are big rumors running around in the market about ICICI bank's exposure to the troubled Lehman Brothers Bank and its Bonds. There have been questions raised about ICICI bank's solvency concerns.
"The exposure is very small compared to our balance sheet and profitability and the risk could be even lower," she said. Some of the losses on overseas investments, Kochar said, are just mark-to-market provisions, "not underlying credit losses".
On rumours of senior management selling their stake, Kochar said that none of the bank’s working directors has sold any stake in 2008 and described these speculations as "malicious". "We have reasons to believe the rumours are malicious," she said. The bank plans to urge the regulator to take action against those spreading it.
As per the news, The current credit turmoil in the Wall Street has also impacted the domestic liquidity. But Kochar indicated that ICICI Bank’s liquidity situation remains comfortable as "the bank had taken steps a year ago to increase it". "We operate on domestic liquidity in the range of Rs 8,000 crore to Rs 10,000 crore and global cash and cash equivalents of $2 billion," she said.
On the Wall Street crisis, she said that it is more panic that erosion of underlying value. She noted that recent deals in which US investment bank Merrill Lynch was bought by Bank of America, and Lloyds TSB’s takeover deal of HBOS PLC, UK’s biggest mortgage lender. Both these institutions were bought at much higher prices than their market prices, she pointed out.
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