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Banking stocks weak on overseas concern

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BS Reporter Mumbai
Last Updated : Jan 19 2013 | 10:59 PM IST

The domestic banking stocks witnessed a sharp fall between 2-6 per cent today as concerns of weakening of balance sheet of banks in US and UK spooked investors.

The shares of IDBI Bank was trading at Rs 58.35 down 6 per cent at 1.15 pm on the Bombay Stock Exchange (BSE). Country's largest private sector lender ICICI Bank share was down 4.75 per cent at Rs 319. Share price of largest private sector bank State Bank of India was down 4.15 at Rs 1,134.05.

The UK-based lender Standard Chartered Plc today announced a 1.8 billion pound ($2.69 billion) rights issue to strenghten its balance sheet and give it the flexibility to take advantage of opportunities in the current turbulent markets.

According to emerging markets specialist, the issue price of 390 pence per share would come at a discount of 48.7 per cent to Standard Charterer's November 21 closing price. The bank's biggest shareholder, Singapore state investment company Temasek had planed to take up its rights and is also participating in the underwriting of the issue, the bank said.

Meanwhile, the the US banking giant Citigroup was today propped up with public loans and guarantees worth hundreds of billions of dollars in a bid to stabilise the ailing firm. The group, which has 12,000 UK staff, announced plans to cut 52,000 staff last week but saw its shares tumble 60% as doubts over the bank grew.

But now up to $306 billion (205 billion pound) in Citi’s toxic debts will receive government guarantees in return for $7 billion (4.7 billion pound) in preference shares. The US Treasury will also pump in a further $20 billion (13.4 billion pound) in return for more preference shares to shore up Citi’s finances.

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First Published: Nov 24 2008 | 1:34 PM IST

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