ICICI Bank tanks nearly 6 pct, its biggest single-day fall in more than 2 years

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New Delhi | Published: April 3, 2018 2:14:48 AM

The stock of ICICI Bank on Monday fell 5.93% to end the session at Rs 261.90 on BSE, its biggest single-session decline in two-and-a-half years, amid media reports that Central Bureau of Investigation (CBI) launched an inquiry into ICICI Bank’s Rs 3,250 crore loan to the Videocon Group.

ICICI Bank , rbi, sock marketsLast Thursday, the Reserve Bank of India (RBI) imposed a penalty on ICICI Bank for violating regulations around selling securities from the held to maturity portfolio of the bank’s treasury book.

The stock of ICICI Bank on Monday fell 5.93% to end the session at Rs 261.90 on BSE, its biggest single-session decline in two-and-a-half years, amid media reports that Central Bureau of Investigation (CBI) launched an inquiry into ICICI Bank’s Rs 3,250 crore loan to the Videocon Group.

Monday’s fall erased Rs 10,605 crore of the lender’s market capitalisation. According to media reports, CBI has started a preliminary inquiry into the alleged nexus between the chairman of the Videocon group, Venugopal Dhoot, and ICICI Bank cheif executive officer (CEO) Chanda Kochhar’s husband, Deepak Kochhar.

It has been alleged in media reports that there was a conflict of interest in the Rs 3,250 crore loan given to Videocon by ICICI Bank, as part of `40,000 crore loan by a consortium of 20 banks in 2012. News reports said Dhoot allegedly gave `64 crore in 2010 through a wholly owned entity to NuPower Renewables, which he had set up with Deepak Kochhar and two of his relatives. It was further alleged that he transferred control of the company to a trust owned by Deepak Kochhar for just `9 lakh six months after he received the loan from ICICI Bank.

However, on Wednesday, ICICI Bank in a statement said it had full faith in its CEO and termed the reports as speculation and malicious and unfounded rumours. Moreover, on Monday in an exchange filing, ICICI Bank said it had not received any communication from Enforcement Directorate regarding any inquiry into the loan to Videocon group.

Last Thursday, the Reserve Bank of India (RBI) imposed a penalty on ICICI Bank for violating regulations around selling securities from the held to maturity portfolio of the bank’s treasury book. ICICI Bank’s subsidiary ICICI Securities also had to reduce the offer size of its initial public offering from Rs 4,016 crore to Rs 3,520 crore.

Of the 54 analysts who track the stock, based on data collated by Bloomberg, 50 have a ‘buy’ rating, three a ‘hold’ and one a ‘sell’ on the ICICI Bank’s stock. However, analysts said their views could change based on how the events play out.

“All the negative news happened in the last one month. The asset quality cycle is now coming to an end most likely, and we would see a earnings rebound from the second half of the FY19. We give our ratings based on one year forward earnings. The one-month price movement has been so sharp, and all this news was not factored in by anybody. Everyone will take a fresh call on the stock depending on how these things shape up,” said an analyst requesting anonymity. “This is something that is developing so we have not updated our views on that,” said an analyst of a foreign brokerage who tracks ICICI Bank’s stock.

The slide in ICICI Bank’s stock rubbed off on other group stocks with ICICI Lombard General Insurance falling 0.83% and ICICI Prudential 1.67%. The benchmark Sensex rose by 0.87% and ended the session at 33,255.36.
Axis Bank shares fall over 2%; m-cap declines Rs 2,763 cr Shares of Axis Bank fell over 2% on Monday amid reports that the RBI has asked the company’s board to re-consider the decision to re-appoint Shikha Sharma as its MD and CEO for a fourth term.
The company’s market valuation declined by `2,762.83 crore to `1,27,853.17 crore on the BSE.

The stock dropped 2.20% to end at `498.20 apiece on the BSE. During the day, it lost 3.31% to Rs 492.50 per share.

On the NSE too, the shares went down 2.24% to settle at Rs 499.05 apiece.

In terms of equity volume, 4.17 lakh shares of the company were traded on the BSE and over 71 lakh shares changed hands on NSE.

The scrip is part of the benchmark Sensex index. The RBI has asked Axis Bank’s board to re-consider the decision to re-appoint Shikha Sharma as its MD and CEO for a fourth term, amid concerns over rising bad loans at the country’s third largest private sector lender, sources said.

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