ICICI Climbs by a Record After Saying It Has Funds (Update1)
By M.C. Govardhana Rangan
Oct. 13 (Bloomberg) -- ICICI Bank Ltd., the Indian lender with the biggest losses on overseas investments, climbed by a record after Chief Executive Officer K.V. Kamath said the bank has sufficient funds.
ICICI shares jumped as much as 19 percent, the most since they started trading in September 1997, to 433 rupees in Mumbai. The lender, whose shares fell by a record 20 percent on Oct. 10, was the second-best performing Asian financial stock today.
ICICI is being targeted by short sellers who have spread rumors that the bank may struggle to refund depositors, Kamath said. The stock has slumped 35 percent in a month after Lehman Brothers Holdings Inc. filed for bankruptcy and global banks and securities firms were taken over with emergency rescue packages.
``It's a twin-pronged attack,'' Kamath told NDTV Profit. ``Both prongs are used to one effect: basically, you try to beat down the stock. You spread a rumor, the stock reacts, then you try and cause destabilization in the institution and again the stock reacts.''
Regulators in the U.S., Europe and Australia have banned short sales, where traders sell borrowed shares with the hope of buying them back later at a lower price, on concern investors took advantage of the collapse of U.S. financial institutions to drive stock prices lower.
India should consider a ban on short sales, Kamath said.
``We now have evidence'' that there may have been a concerted effort to drive down ICICI's stock, Kamath said. ``There probably is an organized attempt in terms of spreading these rumors.''
Text Messages, E-Mails
ICICI gained 16.4 percent, or 59.6 rupees, to 423.25 rupees at 11:14 a.m. in Mumbai.
The bank sent text-messages and e-mails to reassure customers that their deposits were safe.
``ICICI has always grown better than its peers, so there was always a feeling that there's something more to it than meets the eye,'' said Arun Kejriwal, head of research firm KRIL in Mumbai. ``In these times, even the slightest of rumors has a more-than- proportionate impact on the stock.''
India's central bank, capital markets regulator and finance minister have also sought over the past week to reassure investors that the nation's lenders have sufficient funds.
``Our banks are ready and willing to provide credit,'' Finance Minister Palaniappan Chidambaram said in New Delhi today. India, which last week made the steepest cut since 2001 in the amount of cash lenders must set aside as reserves, is working on more measures to increase funds in the financial system and will announce the steps ``shortly,'' he said.
India's central bank is prepared to take ``appropriate, effective'' action to maintain liquidity in the nation's credit markets, Reserve Bank of India Governor Duvvuri Subbarao said on Oct. 10.
bloomberg.com |
