ICICI Bank Approves Raising Up To Rs 15,000 Crore

ICICI Bank Ltd. may return to raising equity capital after a gap of nearly twelve years as the Covid-19 crisis adds to the stress on banking balance sheets.

The private lender, in a exchange filing on Wednesday, said its board has approved fundraising of up to Rs 15,000 crore. The fundraise may be concluded in one or more tranches via a follow-on public issue, private placement, preferential issue of a combination thereof, it said.

ICICI Bank had last raised equity capital in the standalone banking business after the global financial crisis. It now joins many peers in raising capital amid the Covid-19 crisis which could lead to a spike in bad loans.

On July 2, Axis Bank Ltd. approved a fundraising plan of up to Rs 15,000 crore. In April, Kotak Mahindra Bank Ltd. had raised Rs 7,442 crore through a qualified institutional placement issue. Yes Bank Ltd., too, has approved a follow-on public issue, the lender said in a notification on Tuesday.

Private banks are raising capital to take advantage of conducive equity markets and to ensure they are adequately capitalised.

In May, Credit Suisse estimated the need for additional capital at $20 billion (about Rs 1.5 lakh crore) over the next 12 months. Of this, state-run banks will need $13 billion (about Rs 97,500 crore) in recapitalisation from the government, the research house said. “We raise our credit cost estimates by 20-60% given the lockdown extensions and unimpressive fiscal stimulus,” said Ashish Gupta, head of equity research at Credit Suisse. “Private banks tier-1 is healthy at 13%, and coupled with strong pre-provisioning profitability, adequate to absorb up to 4% additional credit costs.”

“We, however, expect them to shore up capital buffers and estimate $20 billion in capital-raising by Indian banks in the next 12 months,” Gupta said.

On Wednesday, ICICI Bank shares fell 1.81% to Rs 368.90 apiece on the BSE while the benchmark Sensex lost 0.94% to end the day at 36,329.01 points.