ICICI Bank Blog

This is a Unofficial blog of ICICI Bank Ltd, I created this only for information to all it's investors about what the company is doing.Information in this blog may or may not be correct.

Thursday, September 27, 2007

ICICI raises $2b through bond issues abroad

ICICI Bank, India’s second largest bank, is on a fund raising spree. After raising $1.5 billion a couple of months back through loan markets, it has now raised another $2 billion through a 5-year fixed rate note. This is the single-largest issuance by an Asian bank. With this, the private sector bank has raised $6 billion in this financial year against $6.5 billion in the last financial year.

The notes were sold under 144A/Reg S format. The bank was able to tap qualified US investors through this route. The money has been raised by the bank’s Bahrain branch. The notes have been priced at 237 basis points (bps) over US Libor or at Libor plus 172 bps. The six-month Libor is currently at 5.14%. From an investor breakdown perspective, 32% of the notes were sold to banks, 53% to fund managers and 15% to pension funds and retail. The issue had an order book of $6.05 billion and received interest from 250 investors. This is the first major issuance by an Asian bank, post-subprime crisis.

The offer was lead managed by Deutsche Bank, Goldman Sachs and Merrill Lynch. Incidentally, the bank had raised $1.5 billion through loan syndication programme a couple of months earlier. The issue has a one-, three-, and five-year tranche, and the five-year tranche was raised at Libor plus 65 bps. In January this year, the bank had raised $2 billion under the 144A/Reg S format. It had raised three-year, five-year and upper tier II. The bank had raised $750 million under the five year tranche for which it had paid Libor plus 75 basis points.

However, due to the subprime crisis, there has been a widening of credit spreads globally. The bank’s earlier January issuance is currently trading at Libor plus around 155 bps. ICICI Bank will use this money to fund the needs of its corporate borrowers. Indian corporates have been on a major overseas acquisition binge, and the move seems to be continuing even on the back of the subprime crisis. This is even as there has been a slowdown of credit in the local markets, though there has been some pick-up in the past couple of weeks. This would also mean that the cost of borrowing for Indian corporates would also go up dramatically.

Earlier speaking at a conference in Mumbai, ICICI Bank’s joint MD, Kalpana Morparia said, “Spreads have certainly widened due to credit issues in the US. However, the impact on papers issued by players in emerging markets has been quite moderate. Also, bond offerings by Indian entities in offshore markets have also been modest. However, given the fact that there is a huge interest differential between rupee borrowings and dollar-denominated ones, raising funds from the offshore market still is an attractive proposition. “

Speaking on the sidelines, Ms Morparia said that the bank would take a call on revising its interest rates in its board meeting in October.

Securitisation could be a route to provide a more effective funding route to banks and finance companies, given the growing need for funds in anticipation of future growth in credit.

Wednesday, September 26, 2007

ICICI launches 'Floating Rate Repayment Product'

Country's second largest bank ICICI Bank on Monday launched its 'Floating Rate Repayment Product' for loans on cars, commercial vehicles, construction equipment and professional equipment.

''This makes ICICI Bank the first among private banks and NBFCs to offer this product to retail loan customers,'' said a statement.

ICICI Bank is a leader in providing vehicle loans and it was ssential to launch a product, which is the only private bank giving customers the choice of a Floating or Fixed rates for loan products in the segment, it added.

The floating rate that the Bank is offering is linked to the Floating Reference Rate-FRR, the benchmark used by the Bank for pricing floating rate loans to its retail customers.

Currently the floating rate is available to customers at 50 bps lower than the equivalent fixed rate product.

''Customers must also keep in mind that in the auto loan market, the customer rates vary as at times there are special incentives and discounts available from the manufacturers, or dealers and finance commission,'' ICICI Bank (Head-Vehicle Loans) N R Narayanan said.

ICICI gets full commercial licence in Bahrain

India's largest private sector bank, ICICI Bank has been granted a full commercial branch (FCB) licence by the Central Bank of Bahrain (CBB), the second Indian bank after State Bank of India to offer full banking services in the kingdom.

ICICI Bank had launched its operations in Bahrain as an offshore banking unit (OBU) in October 2004.

"We are happy that we got the FCB licence within three years of our operations in Bahrain," said ICICI Bahrain country head Ajay Sharma.

Sharma said the bank, which operates from one location at the Manama Centre, would now open more branches in different areas of Bahrain.

"We shall identify locations like Gudaibiya, Sitra, and Riffa, where there is a large concentration of Indian population," he was quoted as saying in Gulf Daily News.

ICICI currently employs 85 people and the opening of more branches will create more jobs, he said, adding that the bank will recruit more Bahrainis. "They will either be trained locally or at our training centre in Khandala, near Mumbai.

We may also consider sending employees for on-the-job training at some of our top branches in India."

At present, the OBU branch offered its products to non-resident Indians (NRIs) only, including facilities for remittance, deposits, saving accounts and investment.

"They can also remit money now not only to India but to other countries as well. Under the FCB licence, we are offering the entire products to all nationalities, including Bahrainis."

Another key service of the bank for NRIs is in the area of home loans.

Monday, September 24, 2007

ICICI to expand private banking

ICICI Bank is expanding its private banking business by adding relationship managers and increasing point of presence in tier II and tier-III cities to tap the growing wealth of businessmen, especially small- and medium-sized entrepreneurs.

The wealth management business in India grew by 18.3 per cent 2006 against 7.6 per cent in China. The bank has seen about 65 per cent annual growth in the last three years, bank general manager (private banking) Anup Bagchi said.

The investible assets are growing rapidly in country in tandem with high economic growth (in excess of 9 per cent per annum for the last two years).

The bank has built a team of 450 relationship managers in the country to meet demand for wealth management services from people with investible assets of Rs 10 lakh and above, he said.

The bank did not disclose assets under management’s and number of clients handled by private banking unit.

The attrition rate in relationship managers in bank is 25 per cent, reflecting scarcity of talent. Besides traditional entities, competition in private banking comes from chartered accountants, ing this in focus, bank has tied up with 80 management schools to run courses on private banking in MBA courses to increase pool of managers

The personal wealth industry of the Asia-Pacific region is estimated to be $7.6 trillion.

Sunday, September 23, 2007

ICICI Bank to increase number of clients in Russia

ICICI Bank Eurasia is offering credit card debtors from other banks to start a new credit history in ICICI, ICICI Bank Deputy CEO Vladislav Voitsekhovich said here.

The bank will transfer the debt of the client on any credit card from another bank to its Visa Gold.

''The customer will retain the old card without the debt and moreover will obtain our card with a limit increased by a quarter,'' Voitsekhovich said.

Currently, the holders of ICICI cards are only 2000, but it will rise by four times by the end of the year, he said.

ICICI Bank Eurasia President Niranjan Limaye said, ''In India this programme allows to increase the issue of cards by one third of the amount already issued per month.'' Limaye added the Russian and the Indian markets are very alike so customers should eagerly respond to this proposal.

The debt conversion to ICICI Bank Eurasia will cost 1.3 per cent of the whole transferred sum.

During the first half of a year, the client will pay 0.99 per cent per month from the sum of the debt. If the debt is not paid off by the end of this period, the monthly payment will increase to 1.99 per cent.

Those wishing to use this service of ICICI Bank Eurasia will need to present the card of the previous bank, account statement and passport.

So far this service is available only in Moscow and its adjoining region but will expand in the future.

Voitsekhovich said ICICI bank will be more loyal to borrowers of 37 banks including Citibank, Russian Standard Bank and Alpha Bank.

Tuesday, September 18, 2007

ICICI Bank sees its core fund size touching $23 b

Indian infrastructure space will be the centre of investors’ focus over the next few years, with ICICI Bank anticipating a role in investment of $20-23 billion in this space by 2010-end.

“ICICI Bank believes that it would contribute $20-23 billion in the $500 billion capital expenditure requirement of the infrastructure sector in the next three years,” said ICICI Bank deputy managing director Chanda Kochhar.

According to the bank’s internal estimates, the sector would need about $500 billion, with infrastructure projects accounting for nearly half this amount through 2010. The country’s largest private lender had recently announced a $2-billion infrastructure fund, where it is pooling in capital from foreign investors to be invested in various infrastructure projects in India.

The bank is already believed to have received commitments for one-fourths of the fund size and is likely to contribute about 15% ($300 million) of its own funds. ICICI Bank is looking to follow this fund with a larger one worth $5 billion in 2-3 years. “The $2-billion fund is just the beginning. It is only a small part of our plans to invest in infrastructure projects,” she added.

This fund would be involved mostly in equity investment and icici Bank’s share would be about 15%,” she said. The fund, being managed by Credit Suisse, is likely to close in about three months. ICICI Bank has recently overtaken sbi, its public sector rival and the country’s biggest lender, in terms of assets in overseas business.

Sunday, September 16, 2007

Don't bank on them

Source: Economic Times

When was the last time you examined your bank statement and discovered to your horror and dismay that you’ve been charged for a service that was rendered free in the past? Worse, you’ve been charged much more than what it could possibly have cost the bank and it’s been done without prior intimation. And in the unkindest cut of all, increasingly, the bank in question is not a foreign or a new private sector bank (from whom you might expect such treatment) but from a good old public sector bank!

Well you’re not the only one. And if it’s any consolation it’s much the same story elsewhere in the world. The difference is that there consumers are doing something about it whereas we in India are still content to be at the receiving end.

Consider. HDFC Bank allows its customers the facility of picking up their statements of account and other correspondence from the bank at its branches. In large metros, with working couples and no one at home to receive mail sent by courier, this is a boon. The bank also saves courier charges in the process. But it charges a fee of Rs 200 for the ‘service’!

HDFC Bank is not the only one looking to make a fast buck. Effective July 1, ICICI Bank has raised its rates on services such as ATM, cheque returns, PIN (phone identification number) regeneration and ATM usage. It is already charging Rs 750 for every quarter if any customer fails to maintain a minimum average of Rs 5,000 per quarter. For receiving monthly statements, the bank charges another Rs 200 from the customer. As for ATM usage, only six transactions are free in a quarter. After that, a charge of Rs 15 per transaction will be levied.

Public sector banks have joined the bandwagon. Recently State Bank of India recovered locker rent from its customers for two years together. Without any prior notice or even debit authorisation from the customer! Corporation Bank levies a charge each time it carries out a ‘standing instruction’. If, for instance, you have instructed the bank to transfer a fixed sum from your account to another account with the same bank every month, then the bank levies a charge each time it carries out the instruction even though advances in technology mean there is no additional effort involved once the instruction has been suitably programmed.

So does that mean bank customers have no choice but to grin and bear it? Not at all. We need to take a leaf out of the book of bank customers in the UK where, thanks to determined customer activism, banks have been forced to reimburse unfair charges to aggrieved customers. Following the decision of the UK Office of Fair Trading taking banks to court on unfair charges, last month HSBC became the first bank in the UK to reveal it had paid as much as $ 236 million to aggrieved customers in the first half on 2007. Lloyds TSB followed suit. Big UK banks are estimated to have together paid close to $ 800 million to date.

In India the Consumer Protection Act does talk of unfair charges (much like the UK Unfair Terms in Consumer Contract Regulations 1999). And following the furor over usurious rates of interest charged on credit card overdues, the Reserve Bank of India has set up the Banking Codes and Standards Board of India to monitor adherence by banks to the codes and standards adopted by banks. But adoption of the codes is voluntary and it is left to the discretion of boards of individual banks to prescribe charges; the only proviso being that these should be transparent.

The net result is charges vary from bank to bank and can be, and often are, revised at will. To be sure there is a Banking Ombudsman to whom aggrieved customers can take their complaints. But the procedure is cumbersome and time-consuming so individual customers are virtually powerless to take on banks. But the UK has shown us the way. Banks can be brought to their knees. But for that we need greater customer awareness and consumer action and above all, greater transparency. How about telling banks to disclose how much they recover under different heads in their annual accounts as a first step?

Tuesday, September 11, 2007

ICICI Bank to go retail in Russia, Sri Lanka

India’s most valuable bank by market capitalization, ICICI Bank Ltd, plans to launch retail banking business in Russia and Sri Lanka, two of the 18 countries where it operates.

“We are closely watching these two markets. We plan to launch mortgage products in Russia and auto loans in Sri Lanka,” said ICICI Bank’s deputy managing director Chanda Kochhar in an interview. She did not specify the timeframe for the launch but hinted that these products could be available in these two markets before March, the end of the current fiscal year.

As part of a plan to ramp up overseas operations, ICICI Bank plans to raise $10 billion in foreign currency loans this year, up sharply from the $6 billion it raised last year. The bank’s overseas asset book jumped from $8 billion at the end of March 2006 to $17.5 billion by this March. It is around $19 billion now.
Kochhar declined to predict the bank’s overseas asset growth through this financial year, but said plans to raise $10 billion in overseas loans should give a sense of the growth that the bank is shooting for overseas.

Kochhar also declined to discuss the profitability of ICICI Bank’s overseas operations but said the UK subsidiary, which has an asset base of $6 billion, recorded a 23% return on assets last year.
“That should give you an idea of the profits made by our overseas operations,” she said.
Launched in 2003-04, ICICI Bank’s overseas asset book has been growing much faster than other Indian banks.

For instance, State Bank of India, the country’s largest commercial bank with its presence in 32 countries, has an overseas asset base of around $18.5 billion. The comparable figures for Bank of Baroda and Bank of India, two public sector banks with large overseas presence, were about $7 billion and $5.4 billion, respectively through March.

“These banks are present in many more countries than ICICI Bank but their business has not been growing at a fast pace even though they had entered the overseas market much earlier,” said one senior executive of a banking consultancy firm who does not wish to be named as many Indian banks are also his clients.
What distinguishes ICICI Bank from others in this regard appears to be its strategy of betting on Indians abroad.

“We did not follow the Indian firms but Indian consumers overseas when we started our operations,” said K.V. Kamath, the bank’s managing director and CEO. ICICI Bank now remits 30% of the total $30 billion that non-resident Indians send home every year. Globally, the remittance volume is $280 billion and ICICI Bank wants to have a larger pie of this business.

“Now overseas Indians are sending money through us. We will remit money of Sri Lankans working in the UK to Sri Lanka and so on,” said Kochhar. Riding on the remittance business, ICICI Bank’s fee-based income has been growing by more than 35%. In the quarter ended June 2007, its fee income was Rs1428 crore, more than 15% of its overall income.

Kamath attributes the success of the ICICI Bank model of overseas business to its massive deposit-raising programmes through the Internet. The back-end of the Internet-only deposits, known as “high save deposits” is managed in India, giving the bank cost advantage over foreign banks in their home turf.

“We have raised $4.5 billion through this route, paying marginally higher than local banks overseas even though our cost is much cheaper than them,” said Kochchar. The bank has 100,000 such depositors and 70% of them are now non-Indians. Normally, the bank offers a quarter percentage point higher interest rate than competition on such deposits which can be opened and renewed on the Internet, or transferred to banks with brick and mortar branches after they are due for maturity.

After tapping individual consumers, ICICI Bank is now walking along with Indian corporations, meeting their fund needs for acquisitions overseas. The bank has opened an investment banking wing within the bank to advise on merger and acquisitions and raise syndicated foreign currency loans. Incidentally, its investment banking arm ICICI Securities functions independently of the bank in the same space.

Kochhar singles out loan syndication as one of the major fee income earners, besides the remittance of NRI money into India. According to her, the investment banking wing of the bank has a 53% share in the $18 billion overseas M&A deals since January in which Indian corporations are involved and 9% of $11.5 billion foreign currency convertible bonds that local firms have raised.

Currently, the bank’s overseas assets account for 20% of its total assets of Rs3.57 trillion. Retail loans, the main driver of ICICI Bank’s growth, account for 62% of its assets and corporate loans the rest. Its Rs1.3 trillion retail asset book, after growing by over 60% for two consecutive years, may grow at around 25% this year, according to the bank’s executive director V. Vaidyanathan.

Its UK business, run through six branches, grew from $2 billion to $6 billion last year while operations in Bahrain doubled to $6 billion. The third important overseas centre, which accounts for about $6 billion assets, is Singapore. “The UK is the hub for our European operations, Singapore for Asian operations and Bahrain for the Middle East,” said Kochhar. It has wholly owned subsidiaries in the UK, Canada and Russia; offshore banking units in Singapore and Bahrain and branches in Sri Lanka, Hong Kong, Belgium, Qatar and Dubai. It has representative offices in US, China, the United Aran Emirates, Bangladesh, South Africa, Indonesia, Thailand and Malaysia.

Bad loans rise at ICICI Bank

The rise in interest rates has left its scars on ICICI Bank Ltd’s June quarter results. The bank’s net income was up a comparatively tepid 16% in the June quarter. Loan growth was very muted—advances outstanding went up a mere 1.2% over the end-March level. At the same time, margins worsened, with interest expended as a percentage of interest earned going up to a very high 77.3%, against 71.8% in the March quarter. Net interest margin fell from 2.66% in the March quarter to 2.3%—part of the reason being the higher cash reserve requirement. With retail advances constituting 64% of the bank’s loans, the high interest rates are hurting.
Low growth in net interest income was offset by higher fee income and by “lease and other income”. Among operating expenses, payments to and provisions for employees rose 46% year-on-year. The result: a 29% growth in core operating profit, compared with a 34% y-o-y growth in the March quarter, although higher treasury income and lower premium amortization of SLR securities led to a 58% y-o-y rise in operating profit.
But perhaps the most striking feature of ICICI Bank’s June quarter results is the increase in its bad loans. Net non-performing assets as a percentage of net customer assets increased from 0.98% at the end of March to 1.3% at the end of June. Gross non-performing assets have increased substantially, a clear indication that some of the excesses of the bank’s rapid growth are coming home to roost.

None of this has affected the ICICI Bank stock, which is up around 20% since end-March, in spite of a substantial equity dilution. Part of the reason is because the huge resources that the bank has raised will increase margins and boost advances. Another reason is that there has been a revaluation of its subsidiaries. (However, in the June quarter, although ICICI Lombard’s profits after tax, at Rs45 crore, are three times higher compared with the June ’06 quarter, ICICI Prudential Life Insurance Co.’s new business achieved profit, at Rs165 crore, is lower by Rs21 crore compared with the year-ago period.) But the main reason is that, if we are at the peak of the interest rate cycle and interest rates will now go south, the June quarter results are no guide to the future. It’s no surprise that K.V. Kamath, the bank’s managing director and CEO, has said that current rates of interest could hurt growth.

Gulf firm buys 2.87% stake in ICICI Bank

Dubai International Capital (DIC), the investment arm of Dubai Holding, has bought 2.87% stake in ICICI, India’s second largest bank.
Dubai International Capital’s investment in the Indian bank follows its recent purchase of 3.12% stake in the European Aeronautic Defence and Space Company EADS, the parent company of aircraft manufacturer Airbus.
ICICI Bank had assets of $79 billion at the end of 31 March.
It raised $4.9 billion in India’s biggest share sale open to domestic and foreign investors in June.

“The investment allows DIC to become one of the leading shareholders in the company,” DIC said in a statement. But, it didn’t disclose the value of its investment.
The Dubai firm may have paid $717 million for the stake acquired from the American Depository Receipts (ADR) issue open to foreign investors.
However, at today’s closing share price DIC’s stake would be worth $741.5 million.
“The strategic investment in ICICI supports the global diversification and growth mandate for DIC and its parent company, Dubai Holding,” DIC chief executive officer Sameer Al Ansari said.

The Singapore government investors held about 9.7% stake in ICICI before the latest share offering and had the approval to raise their stakes substantially.
DIC aims to have assets worth $25 billion in the next two years.

Not interested in foreign banks, want more branches: ICICI

ICICI Bank, the country’s biggest private lender that has played a key role in India Inc’s overseas expansion drive, itself does not see any merit in acquiring a foreign bank at the moment and prefers to grow through the organic route in the domestic market.

“Organic growth is the better way for us to grow further ... We are an Indian bank and for boosting domestic operations we do not need to tie-up with foreign banks... other than deep pockets, what can they bring for us on the table,” ICICI Bank Managing Director and CEO K.V. Kamath told PTI in an interview.

“Foreign banks do not bring anything on the table except large capital. On technology front we have everything at par with best of them... We have right skill set also... why should we need to go for an acquisition,” he said.

If anything was needed for boosting the bank’s growth trajectory, it was more branches to service customers. “Branch licensing needs to be liberalised in the country,” he said.

ICICI has just about 1,000 branches, as compared to nearly 10,000 branches of the country’s largest bank SBI.
“There are immense opportunities in the Indian market. Even foreign banks are coming here only because of huge growth potential in the banking space,” Kamath said, replying to a query whether the bank was considering overseas acquisitions.
Bank’s Deputy MD Chanda Kochhar also ruled out any foreign acquisition, saying “globally we are not very big and would not be interested in small acquisitions... we want to grow big (organically) before doing any thing significant”.
According to Kochhar, the bank was involved in 70% of Indian companies’ overseas merger and acquisition deals in the first half and expects to maintain this market share in the remaining part of 2007 as well.

ICICI Bank has so far acquired just two small-sized banks -- Sangli Bank and Bank of Madura -- both in India. Even in domestic market, Kamath noted, not many acquisition targets were available for private sector players.

He made it clear that as such there were no banks in on its radar, saying that “even by acquiring any entity abroad we would not gain anything in the domestic market”.
The preferred way for the growth of ICICI, Kamath said, would be organic and hoped that the bank would get opportunities sooner than later to expand branch network.
ICICI Bank has a highly efficient team of executives and matched the best of the technology in the world and what it lacked was the number of branches, he said.
Kamath said India needed large financial services firms, saying the top five banks together here are currently smaller than the fourth or the fifth largest bank in China.

“If we need a global size and scale in next 5-8 years, we need to start working now.... We need to create a framework for growth -- one route is consolidation, another is the organic growth and the third one could be opening the sector even further and let the global players come in,” he noted.

However, Kamath said: “You must let the local players grow up before further opening the sector for foreign players to put Indian banking sector on a global stage.”
Kamath also said India can emulate China in encouraging domestic banks, instead of foreign banks.

“They are not giving unrestricted access to foreign banks, rather they are allowing the local banks to grow up... besides their economy started opening up about 15 years ago, while India is only two-three years in this process,” he said.
Indian banks are better placed than foreign players as the locals know domestic conditions much better, Kamath said.

However, different issues are constraining the public and private sector players, he said, adding that the problem with PSU banks was that they have yet to go up the technology scale and the skill set. Another key challenge before PSU banks was attaining the ability to dole out the right compensation.

On the other hand, the private sector had the technology and the money paying ability. But they did not have the branch network, which the PSU banks have, he said.
“There is huge growth opportunities to tap the millions of unbanked people and the government and regulators have a role to play in this growth story as a facilitator,” he said.

Monday, September 10, 2007

India's overseas M&A likely $35 bn; ICICI Bank eyes 70 pc role

Reflecting the buoyancy in India Inc's quest for global mergers and acquisitions, the country's largest private lender ICICI Bank today said it will have a role to play in 70 per cent of the deals that are expected to be about 35 billion dollars in aggregate during 2007.

"Indian companies made overseas acquisitions worth 20 billion dollars in 2006, a level crossed during the first six months of 2007 itself... this year even on a conservative note overseas mergers and acquisitions are expected to reach 30-35 billion dollars," ICICI Deputy Managing Director Chanda Kochhar told a news agency in an interview.

"ICICI Bank's involvement -- be it advisory, lending or syndication of loans -- accounted for 70 per cent of the deals in the first half of the year and we hope to maintain this market share," she added.

Kochhar, ranked 30th in Fortune list of world's most powerful businesswomen, said the Bank also helped companies raise 24 billion dollars in overseas borrowings last year. It was quite possible for ICICI to be counted among the top 25 global banks, she said.

"ICICI Bank was the top banker in helping Indian companies raise syndicated loans through ECBs, a segment dominated by foreign banks till 2-3 years ago," she added.

While the Bank is gearing up to play a key role in Indian companies' inorganic expansion, Kochhar said ICICI itself would pursue organic route for faster growth as she did not find any merit in buying small properties at this juncture.

"Globally we are too small. But any global step should be a big one. Before that the right strategy will be to grow organically till we reach the next level.

ICICI Bank to raise $2b from overseas investors

India's most valuable, is seeking $2 billion from overseas investors to tap demand for roads, ports and power in the fastest-growing economy after China, following similar funds by Citigroup and Blackstone Group.

The fund raising will probably be finished in about three months, Chanda Kochhar, deputy MD at the Mumbai-based bank, said on Friday. "There's a lot of demand for funds from sectors like power, airports, roads and telecoms," Kochhar said. The fund will have a lifetime of more than 10 years, she said.

Indian government plans to build $320 billion of infrastructure projects to ease bottlenecks that are constraining growth. GDP has expanded at a record 8.6% average pace since 2003, faster than any of the world's 20 biggest economies except China.

Citigroup, buyout firm Blackstone and Infrastructure Development Finance in February agreed to put $250 million each into an infrastructure fund that will invest $2 billion in companies.

In August, Europe's biggest publicly traded buyout and venture capital firm 3i Group said it will invest a minimum of $250 million in an infrastructure fund that was set to raise $1 billion.

"India's infrastructure story is just beginning and it has strong appetite for funds," said TP Raman, who oversees assets equivalent to $2.5 billion as MD of Sundaram BNP Paribas Asset Management.

ICICI's latest fund will only be available overseas as domestic investors have other ways to invest in infrastructure projects, Kochhar said. The fund does not promise or target any rate of return and it has not decided on how much it will leverage, she said.

"We would initially begin with investments from the fund and later decide whether to leverage or not," Kochhar said. "The advantage is ICICI has expertise in project lending since it was a term lender before becoming a bank."
Inadequate levels of infrastructure investment are estimated to be holding back India's economic growth by as much as 2% a year, 3i said when it announced its fundraising plans on August 23.

Highways, which move almost 80% of the goods in India, account for only about 2% of the country's 3.32 million kilometers (2.1 million miles) of roads.

It takes an average 85 hours to unload and reload a ship at India's major ports, 10 times longer than in Hong Kong or Singapore, according to government figures.

ICICI Lombard emerges lowest bidder for rail passengers cover

Leading private insurer ICICI Lombard is understood to have emerged as the front-runner to bag Indian Railways' account to provide insurance cover to more than 650 crore passengers who travel by trains every year.

ICICI Lombard is said to be the lowest bidder for providing insurance cover to passengers against death and disability in train accidents, industry sources said.

The company is believed to have made a bid of Rs 0.0475 per person, resulting in a total premium of Rs 34.35 crore, pipping private sector rival Reliance General Insurance of the Anil Ambani Group. Four state-run insurers -- United Insurance, New Indian Assurance, Oriental Insurance and National Insurance -- were also in the race to bag the deal.

The cover could be up to Rs four lakh to the next of kin of passengers in case of death and lower in case of disability resulting from train accidents.

When contacted, Vishakha Mulye, ICICI Bank's Group Chief Financial Officer, told PTI the company did not have any communication from the Railways on the issue.

Asked as to who ICICI Lombard would be tying up with for re-insurance of the mega deal, she said: "The partner and the size of re-insurance would be taken up at appropriate time... we are yet to hear if we are the lowest bidder."

ICICI Lombard is a joint venture between the country's largest private lender ICICI Bank and Lombard, a part of Royal Bank of Scotland.

Wednesday, September 05, 2007

Reliance, ICICI launch money transfer via mobile phones

You can soon transfer money using your mobile phone at any time of the day in India. While many banks and telecom companies have been in various stages of the idea, Anil Ambani's Reliance arm has set the ball rolling, formally launching on Wednesday a service that is being tested since July.

Reliance Communications has tied up with ICICI Bank for a plan under which one customer will be able to transfer money up to Rs one lakh per day, though a single transaction cannot exceed Rs 5,000.

For the moment, money transfer can take place only between ICICI's savings bank holders, and would be avilable to Reliance's R-World value-added service that enables transactions.

"Keeping the regulations in mind, we are also looking at intra-bank and across-the-countries transfers also and are talking to a number of players regarding that," said Mahesh Prasad, President, Applications and Software Group in Reliance Communications.

The user will not have to pay any fee to the bank. Reliance Communications will charge Rs 10 per transaction, though as a promotional ofer, it will be free for the first 90 days.. The transfer is also expected to happen in real-time. "From ICICI Bank to ICICI Bank it is in real-time. For transfers into other banks accounts (as and when it would happen) it would take the normal time taken by the respective banks in the clearance process," said a spokesperson for ICICI Bank.

Tuesday, September 04, 2007

ICICI Bank confident of leveraging up to $75bn

India's largest private sector lender ICICI Bank on Tuesday said it can mobilise up to 75 billion dollars in the next three to five years to meet the growing economy's credit requirement by leveraging the bank's just concluded five billion dollar public offer.

"Banking is all (about) leveraging... we just now concluded the five billion dollar public offer... this can help us raise funds from borrowing in the ratio of one to ten," ICICI Bank Managing Director and CEO K V Kamath told.

This coupled with internal generation could help us generate funds between 50 to 75 billion dollars that could be used for the credit needs of the country, about whose sustainable high growth the banker was bullish.

Kamath, however, declined to comment on any of the bank's financial plans and borrowing details.

Within a month of its successful equity offer in domestic and international market, the bank today closed a syndicated loan of 1.5 billion dollars (in yen denomination), which is the largest ever such borrowing by an Indian financial institution.

ICICI had raised about 6.5 billion dollars in the previous financial year to meet the growing credit requirements.

On the issue of further hitting the equity market, Kamath said that the bank has no plans to go for this route for at least three years and that the bank was in a comfortable position to meet the credit demand put up by the fast growing economy.

"If the economy grows at a high pace, which I have no doubt about it, then the banking services sector also grows... in case the economy grows by about ten per cent annually, the financial services sector will grow by 25-30 per cent.

Monday, September 03, 2007

ICICI Bank, Korea Exim Bank sign $200 mn loan agreement

India's largest private sector bank ICICI and Export-Import Bank of Korea, an official export credit agency supporting Korean companies, on Tuesday signed a loan agreement for a line of credit.

Under this agreement ICICI Bank's Hong Kong branch would avail $200 million revolving line of credit from Korea Exim Bank, ICICI Bank announced today at a press conference here.

This line of credit would be utilised by ICICI Bank to finance the foreign currency requirement of Indian companies as also companies from the neighbouring countries having equity participation by Korean companies or having business relationship with them.

This line of credit is the first of its kind to be extended by the Korea Exim Bank to any bank in the world.

The agreement was signed by K V Kamath, MD and CEO of ICICI Bank and Cheon-sik Yang, Chairman and President of Export-Import Bank of Korea.

FIIs allowed to invest in ICICI Bank

The Reserve Bank of India on Friday allowed foreign investors to purchase equity shares of ICICI Bank from secondary markets in India.

The foreign institutional investors' (FIIs) holding in the bank has come down below the trigger limit of 74 per cent of its paid up capital. Consequently FIIs, non-resident Indians or persons of Indian origin can purchase equity shares of the bank from secondary markets, RBI said in a release.

The share purchase has to take place under Portfolio Investment Scheme (PIS) through secondary market in India, the banking regulator added.

ICICI Bank to protect insurance JVs

Even if RBI approves ICICI Bank’s proposal to set up a holding company for its insurance and asset management businesses, the private bank will have to not only lend its brand and provide technical support, but also chip in if the insurance JVs are in trouble. The Insurance Regulatory & Development Authority (IRDA) has put in the condition while approving the private bank’s proposal to set up an intermediate holding company between the insurance firm and the bank.

This will hold true even if the bank’s stake in the proposed holding company undergoes dilution — which it will as the holding entity raises money by offering new shares to financial investors. Sources said since IRDA had issued the insurance licence based on ICICI Bank’s balance-sheet, the regulator wants the bank to take full resposibility for any eventuality.

The proposal is a test case for other banks and several corporates that have floated insurance JVs and are looking at ways to finance the huge investment needs of the insurance business.

According to the bank’s proposal, which has not gone down well with RBI, ICICI Bank wants to transfer its equity stakes in the insurance and asset management JVs to a holding company. In return, ICICI Bank will get shares of the proposed holding company.

Though IRDA okayed the proposal, it has been categorical that the bank, and no other entity, can be the promoter of the insurance companies. IRDA, however, has not stipulated a minimum shareholding that ICICI Bank has to maintain in the holding firm. In other words, even if a holding company owns the shares in the insurance JVs and the bank ceases to be a direct shareholder in the ventures, IRDA wants a status quo as far as ICICI Bank’s role as the promoter is concerned.

The bank is willing to give the required commitment to the insurance JV and the ICICI Bank board has also endorsed the decision.

However, as of now, RBI has voiced its discomfort over an intermediate holding company structure and has given banks three weeks to give feedback. The question that crops up is whether RBI will squash the idea of an intermediate holding company or will it insist on new conditions that ICICI Bank or any other entity will have to meet to adopt such a structure.

Banking circles think if RBI eventually clears the structure, it will ensure the holding company, which is like a special purpose vehicle, is regulated and not overleveraged. This would mean there could be serious restrictions on whether the holding company can borrow, or raise debt capital, to infuse money into the insurance company.

Secondly, the bank has to spell out the ways it is exposed to the insurance business and, thirdly, the regulations that would apply to an investment company managing the group investments and whether such an entity would have to be registered with the central bank.

According to an RBI official, given the large investment requirement in insurance, ICICI Bank would have found it difficult to retain its holding in insurance business below the stipulated limit under para-banking rules. The bank possibly felt the holding company was a solution.

ICICI Bank Unveils Gem & Jewelry Specific Card

The ICICI Bank, a leading Indian bank, Monday announced the launch of a gems and jewelry industry specific platinum credit card. The announcement was made at a seminar titled “Maximizing Opportunities: A Perspective on Relationships with Banks”, held at IIJS in Mumbai.

The card, launched with the GJEPC, will have an enhanced credit line of Rs. 1.5 - 2 million ($37,000 - $49,000), which will be available at a reportedly attractive interest rate.

The card was launched jointly by Sanjay Kothari, chairman GJEPC; Vasasnt Mehta, vice chairman GJEPC; Sachin Khandelwal, senior general manager & head of the Cards Product Group of the ICICI and Sanjeev Mantri, general manager, SME Lending Portfolio Group, ICICI.

Khandelwal said that the ICICI’s total lending to the sector is currently at around $1 billion, of which about 50 percent is to the retail business.

He further stated that the bank’s total credit card business amounted to roughly Rs. 5 billion ($122.9 million). Of this, the share of the gem and jewelry industry was around 10-15 percent, which trails only the travel and tourism industry and is “catching up fast.”

ICICI Bank mandates 10 intl banks for 1.5 bn USD loan

Close on the heels of raising USD 5 billion through a public offer, country's largest private lender ICICI Bank has mandated ten international banks to arrange a Japanese Yen equivalent loan of USD 1.5 billion (about Rs 6,100 crore).

The funding would be the biggest-ever offshore syndicated loan facility by an Indian financial institution and is likely to be announced tomorrow, sources said.
The funds would be used for general corporate purposes. The ten banks mandated for the funding include BNP Paribas, Galyon, Goldman Sachs, HSBC, Standard Chartered Bank and Sumitomo Mitsui, the sources added.

When contacted, an ICICI Bank spokesperson declined to comment on the issue.
The debt raising exercise follows the bank's follow-on public offer in domestic and international markets in June this year. ICICI Bank had raised about Rs 10,000 crore from the domestic market through issue of equity shares, and an equivalent amount through a secondary offering of American Depository Shares in the US.