A government statement put ICICI Bank, the country?s second-largest commercial bank, in the eye of a market storm on Tuesday. Minister of state for finance PK Bansal told the Rajya Sabha that following the subprime crisis, ICICI Bank had reported, as on January 31, 2008, a mark-to-market loss of $264.34 million in its overseas operations from exposure to credit derivatives and investments. Bansal was replying to Rajya Sabha member MV Mysura Reddy.
However, ICICI Bank, in a communication to stock exchanges, said it has no material direct or indirect exposure to US subprime credit.
The bank said the widening of credit spreads in the international markets have resulted in a negative mark-to-market impact on the credit derivatives and fixed income investment portfolios of the bank and its overseas banking subsidiaries, while there has been no significant deterioration in the actual credit quality of underlying investments.
ICICI Bank and its overseas banking subsidiaries have an aggregate exposure of $2.2 billion in credit derivatives. As of January 31, the mark-to-market negative on this portfolio, due to movement of credit spreads, was about $155 million, of which $88 million had been provided for in the financial statements of the bank and its subsidiaries for the nine months ended December 31, 2007, the bank told the bourses.
In addition, ICICI Bank and its overseas banking subsidiaries have fixed income investment portfolios that have a mark-to-market negative from widened credit spreads. As of January 31, this negative was about $108 million. Of this, $101 million had been accounted for in the financial statements as of December 31, 2007.