With major private sector lender ICICI Bank under the lens, after allegations of a possible impropriety in the Videocon loan case involving CEO Chanda Kochhar, global firm S&P says that the bank could face loss of reputation, legal as well as financial risks if allegations are proved. “The ICICI Bank board has offered full support to the leadership team. However, if allegations against the management prove to be true, they could hit the bank’s reputation and expose it to legal and financial risk,” noted the firm.
The global rating agency said that the recent governance issues in leading private banks ICICI and Axis reiterate the need to improve risk management and maintain strong governance practices in the country. According to S&P, a number of banks in India confront serious governance and risk issues, and ‘toning at the top’ is crucial. The firm has called on to the leadership groups in Indian banks to enhance the risk culture, reputation, and financial strength of banks.
The CBI quizzes ICICI Bank chief executive Chanda Kochhar’s brother-in law Rajiv Kochhar in connection with the bank’s loan to Videocon, global firm Morgan Stanley says that the bank’s shares are under pressure driven by CEO’s new concerns. According to Morgan Stanley, newsflow will drive volatility in the stock.
Notably, S&P has ‘BBB-’ rating with a stable outlook for both the banks. A recent report by Morgan Stanley too noted that ICICI Bank’s stock could see heightened volatility, and newsflow around the bank’s CEO will drive volatility in the stock. ICICI Bank shares closed at Rs 287 on Thursday, up by nearly 1% on Thursday.
ICICI Bank has assumed increased focus, after CBI initiated a preliminary investigation against ICICI Bank chief executive Chanda Kochhar’s brother-in law Rajiv Kochhar in connection with the bank’s loan to Videocon. Notably, Rajiv Kochhar, heads Singapore-based Avista Advisory Group, and has come under scrutiny after allegations that his company may have benefited from his relationship with the ICICI Bank CEO to get the mandate to restructure foreign currency-denominated debt deals of seven companies, which included Videocon.