Date:05/03/2008 URL: http://www.thehindu.com/2008/03/05/stories/2008030555571700.htm

Business

ICICI Bank’s negative exposure

Special Correspondent

MUMBAI: The impact of U.S. sub-prime issues (connected with housing loans) reached the Indian shores too as ICICI Bank on Tuesday revealed that it is having a negative portfolio exposure in credit derivatives.

However, ICICI Bank in a statement to stock exchanges said that it had no material direct or indirect exposure to U.S. sub-prime credit.

“The widening of credit spreads in the international markets has resulted in a negative mark-to-market impact on the credit derivatives and fixed income investment portfolios of the bank and its overseas banking subsidiaries, while there has been no significant deterioration in actual credit quality of the underlying investments,” the bank said in a statement.

ICICI Bank and its overseas banking subsidiaries have an aggregate exposure of $2.2 billion in credit derivatives.

“As of January 31, 2008, the mark-to-market negative on this portfolio due to movement of credit spreads was about $155 million, of which $88 million had been provided for in the financial statements of the bank and its subsidiaries for the nine months ended December 31, 2007,” the bank stated.

In addition, ICICI Bank and its overseas banking subsidiaries have fixed income investment portfolios, which have a mark-to-market negative due to widening of credit spreads.