FII stake in private banks in Q4 was higher than PSBs

Investments by Foreign institutional investors (FIIs) in private banks were significantly higher than in public sector banks (PSBs) during March this year.

A study of 12 PSBs and 16 private sector banks as on 31st Mar 2008 and on 31st December. 2007 shows this. Between 31st Mar 2008 and 31st December, 2007, FIIs stake, in PSBs, decreased by 3.39%, where as in the case of private banks, the stake increased by 5.31%.

Out of 16 private bank stocks, 9 banks saw an increase in FIIs stake. Significant increase in FIIs stake was seen in the case of Karnataka Bank (35.44% to 39.77%), Yes Bank (27.4% to 30.84%) and Federal Bank ( 39.59% to 42.05%) on Mar.31, 2008 from the level of Dec.31, 2007. But there was a decreasein stake exposure in the case of IndusInd Bank (20.34% to 19.01%), South Indian Bank (46.86% to 45.83%) and HDFC Bank (26.57% to 25.89%) during the period. FIIs stake in ICICI Bank increased marginally from 39.96% on December 31, 2007 to 40.30% on March 31, 2008. The average share of FIIs stake in total of 16 private banks increased from 29.59% to 30.49% during the study period. The top 3 private banks according to the share of FIIs stake in total on March 31, 2008 are South Indian Bank, Federal Bank and ICICI Bank. Among the above top three, highest increase in FIIs share was registered in the case of Federal Bank on Mar.31, 2008 from the level of December 31,2007. Less than 5% FIIs share as on March 31, 2008 was seen in the case of Lakshmi Vilas Bank (2.72%).

As on March 31, 2008, the increase in FIIs share of public sector banks was lower compared to private banks.Among the 12 PSBs, 2 PSBs saw an increase in FIIs stake.Significant increase in FIIs stake was seen in the case of SBI (12.35% to 12.81%).And the share of FIIs in total of Vijaya Bank (8.68% to 4.63%) and Canara Bank (17.08% to 13.99%) decreased significantly during the above period.The average share of FIIs stake in total of 12 PSBs decreased marginally from 15.07% to 14.16% during the study period.The top three PSBs according to the share of FIIs stake in total on March 31, 2008 are PNB (20.04%) ,Bank of Baroda (19.77%) and Union Bank of India (19.47%).

Less than five per cent FIIs share as on Mar.31, 2008 was observed in the case of Vijaya Bank (4.63%). From the above analysis one thing is clear that FIIs are taking more interest in private bank stocks.