ICICI Bank planned share sale to bump up core equity capital

Mumbai: Private lender ICICI Bank said on Wednesday that it would raise upto Rs 15,000 crore through an equity share sale. This planned fund raising could significantly bump up the lender’s core equity capital.

“The board has approved raising of up to Rs 150 billion, in one or more tranches, by way of issuance of Securities, through one or more permissible modes,” the notice to exchanges stated. The bank added that it could explore raising funds through private placement, preferential issue, QIP or FPO.

The bank’s total capital adequacy at the end of the March quarter stood at 16.11%, while it’s tier-1 capital adequacy was 14.72% compared to the minimum regulatory requirements of 11.08% and 9.08% respectively.

Recently, the lender had announced its intention to raise capital to strengthen its balance sheet and join peer private lenders who have already announced fund raising plans. This is the third large private lender after Kotak Mahindra Bank and Axis Bank to make such similar announcements. HDFC Bank has said it is looking to raise funds through debt instruments.

The bank had recently also sold stake in its insurance ventures ICICI Prudential and ICICI Lombard for a total consideration of Rs 3090 crore. The private lender had also taken a separate enabling resolution in the month of May to raise Rs 25,000 crore through debt securities and separate $3 billion through issuance of bonds, notes, certificate of deposits in the overseas markets.

Most large Indian banks have announced fund raising plans as they prepare for high bad loans and large provisioning requirements once the six month relief on paying loan dues lifts at the of August. As per rating agency Crisil bad loans could rise as much as 11.5% of the total advances at the end of this year. Bad loans were at 9% levels at the end of the fiscal year gone by.

Recently, private peer Axis Bank announced it would raise upto Rs 15,000 crore in a equity share sale a move that could bump up its core equity capital ratios by 200 basis points. Private lender Kotak Mahindra Bank also raised Rs 7442 crore through a QIP issue. HDFC Bank also recently sought shareholder approval to raise Rs 50,000 crore through debt instruments.