ICICI Bank is slated to hit the market with a Rs 350 crore subordinated bond issue. The bank had earlier come out with an $175 million American Depository Shares (ADS) issue in March 2000.
Rating agency Icra has given a LAAA rating to the issue indicating highest safety. ICICI bank executive director Nachiket Mor said: "With the bank growing reasonably fast, we would need capital. As and when we need the funds, we will go in for the issue."
The bank's capital adequacy ratio (CAR) for the year ended March 2001 stood at 11.57 per cent. The bank has a Tier-I capital of Rs 1,302.43 crore with Tier-II of Rs 144.96 crore. With the Rs 350 crore addition in Tier-II the total capital base would increase to Rs 1797.39 crore.
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According to market observers, ICICI Bank issue may be the beginning of a slew of subordinated debt issues that will hit the market soon. The Reserve Bank of India recently changed the capital norms and allowed banks to take exposure in corporates on a combination of Tier-I and Tier-II capital base. Technically, Tier-II capital base cannot be more than 50 per cent of the Tier-I capital.
ICICI Bank had taken over Bank of Madura and it is expected to spend around Rs 60 crore on integrating BoM with itself.
According to Icra, the increase in net NPAs of ICICI Bank from 1.14 per cent to 1.44 per cent was due to NPAs from BoM. It added that management control on asset quality will be the key to the future management.