ICICI Bank increases size of ADR issue - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

ICICI Bank increases size of ADR issue

Mar 8, 2000

ICICI Bank plans on increasing its American Depository Receipt (ADR) issue from US$ 125 m to US $ 175 m. The ADR issue is expected to be listed on the New York stock exchange by the end of this month. ICICI Bank, a subsidiary of ICICI reported a turnover of Rs 6.3 bn as at March'99. In a span of five years of operations its branch network has expanded to 55. Its capital adequacy ratio was 11.06% as at March'99.

The main reason for this issue is to spruce up its capital adequacy ratio (CAR) that recently stood at 9%. As per the RBI guidelines banks are required to maintain a 9% capital adequacy ratio as at March'2000. Hence if ICICI Bank does not raise equity it will be unable to expand its asset base. ICICI Bank's business ( which includes deposits, advances, and credit like corporate debt instruments) has gone up by 71.5% for the first 9 months of FY2000, over the corresponding period of FY99.

Also ICICI is seeking permission from RBI to keep their stake at above the stipulated 40% level. According to RBI regulations promoters of new generation private banks have to reduce their stake to 40% over a period of time. Currently ICICI has a 74.3% stake in ICICI Bank and this will come down to 58% after the issue. ICICI's request for keeping the stake in ICICI Bank to above 40% has also been the result of a notification issued by RBI in January 1999, wherein RBI has stated that if a long term lending financial institution decides to provide commercial banking services directly it could do so through a 100% subsidiary.

The interest of ICICI in ICICI Bank has been very useful as it has been able to leverage upon ICICI's existing relationships. Hence ICICI Bank feels that if this stake is reduced it could affect the business prospects of the bank. Hence in a statement filed the US Securities and Exchange Commission it has mentioned this risk. The statement reads " Any divestment of ICICI's holdings in ICICI Bank could result in the latter's inability to continue to exploit corporate and retail relationships of the ICICI group. This would adversely affect their business, results of operations and financial position."

Hence to convince the future investors the bank has applied to RBI for keeping the stake above 40%.

Since FY99 ICICI Bank's performance has been phenomenal and it has become an aggressive player. It is also on the prowl of a takeover target to keep up its expansion plans. With good growth prospects and a strong brand name raising equity should be easy for them.

Market View:
ICICI Bank has good growth prospects and is a technology savvy bank. Its on the "BUY" list of many analysts.


Equitymaster requests your view! Post a comment on "ICICI Bank increases size of ADR issue". Click here!

  

More Views on News

ICICI BANK Announces Quarterly Results (1QFY21); Net Profit Up 36.2% (Quarterly Result Update)

Jul 30, 2020 | Updated on Jul 30, 2020

For the quarter ended June 2020, ICICI BANK has posted a net profit of Rs 26 bn (up 36.2% YoY). Sales on the other hand came in at Rs 199 bn (up 10.8% YoY). Read on for a complete analysis of ICICI BANK's quarterly results.

ICICI BANK Announces Quarterly Results (4QFY20); Net Profit Up 26.0% (Quarterly Result Update)

May 12, 2020 | Updated on May 12, 2020

For the quarter ended March 2020, ICICI BANK has posted a net profit of Rs 12 bn (up 26.0% YoY). Sales on the other hand came in at Rs 192 bn (up 11.0% YoY). Read on for a complete analysis of ICICI BANK's quarterly results.

How the YES Bank Collapse Unfolded - 10 Points (Sector Info)

Mar 9, 2020

A timeline of how YES Bank went from a stock market darling to a pariah.

Today's Stock Market Crash: 10 Points (Sector Info)

Mar 6, 2020

Top factors that dragged the markets lower today.

More Views on News

Most Popular

How the 8-Year Cycle Can Help Identify Multibaggers (Fast Profits Daily)

Sep 11, 2020

This is how you can apply the greed and fear cycle in the market to pick stocks.

I Recommended this Stock over Page Industries because it's Relevant to Doubling Your Income (Profit Hunter)

Sep 7, 2020

Things are not often what they seem in the market and how you can take advantage of this.

The NASDAQ Whale Could Harm Your Portfolio (Fast Profits Daily)

Sep 7, 2020

The discovery of Softbank pushing up prices on the NASDAQ will cause volatility in the market. Stay alert!

This Could Be the Best September for Auto Stocks (Profit Hunter)

Sep 11, 2020

Here's why I think this month could be a great for auto stocks.

More

Covid-19 Proof
Multibagger Stocks

Covid19 Proof Multibaggers
Get this special report, authored by Equitymaster's top analysts now!
We will never sell or rent your email id.
Please read our Terms

ICICI BANK SHARE PRICE


Sep 18, 2020 (Close)

TRACK ICICI BANK

  • Track your investment in ICICI BANK with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
  • Add To MyStocks

COMPARE ICICI BANK WITH

MARKET STATS