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Lehman Crash - How ICICI Bank Faced The Lehman Fallout - The Economic Times
Lehman Crash - How ICICI Bank Faced The Lehman Fallout - The Economic Times
Industry
English Edition | 09 August, 2021, 12:30 PM IST | E-Paper
Agencies
No Indian institution was affected as
badly as ICICI Bank by the global
financial crisis. So deep were the
concerns over ICICI Bank at that time
that Infosys, whose founder NR
Narayana Murthy was once on ICICI
Bank board, withdrew Rs 1,000 crore of
The bank had to move truckloads of cash to meet
its fixed deposits with the bank and
the withdrawal demand. moved them to State Bank of India.
The main trigger for this panic was that ICICI Bank’s global ambitions had
resulted in the private lender being the only institution to be directly hit by
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09/08/2021 Lehman crash: How ICICI Bank faced the Lehman fallout - The Economic Times
A news report that the private bank is said to have borrowed short-term loan
of Rs 1,000 crore from a Delhibased government-owned bank at 20% further
added to the panic among small depositors.
The subprime problems for the bank had started much before the Lehman
collapse. Issuing a statement in Parliament, the then minister of state for
finance PK Bansal disclosed that ICICI Bank has lost $250 million
internationally due to the subprime crisis. The bank also revealed that the
group had an exposure of $2.2 billion in credit derivatives – which had turned
into a bad word in the aftermath of the crisis.
It was in the midst of this crisis that Chanda Kochhar took charge as the new
CEO and announced a change in strategy. Compared to the earlier strategy of
chasing bulk deposits in order to grow fast, the bank started focusing on retail
and transnational banking. The bank, which was relying on agents to grow its
small-ticket personal loan business, exited high risk loans and started
providing loans through its branches.
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