"Like any organisation, ICICI Bank determines allocation of capital and other resources to different areas of business based on opportunities and risks, and continuously evaluates different areas for this purpose. ICICI Bank continues to operate its branches in Sri Lanka and the US," a spokesperson for the bank said.
Managing Director and CEO Chanda Kochhar told Business Standard in an interview last week that ICICI Bank was confining its fund raising activities to deposit mobilisation and scaled down those through bond issues and inter-bank market. The bank is centralising a lot of the activities instead of having separate teams in various geographies. Kochhar had said that the bank's international operations would continue to account for about a quarter of its revenues and profits but the growth rate would fall below the 50 per cent levels seen in the last few years.
Given the high spreads and risk aversion in overseas markets, Indian companies too have become dependent on local sources for raising funds. The overseas fund raising by Indian companies through external commercial borrowings and foreign currency convertible bonds (FCCB) declined sharply to $18.36 billion in 2008-09 from $ 30.95 billion in 2007-08. Apart from funding domestic operations these funds were used for global acquisitions.
ICICI Bank's US branch started operations in the second half 2007-08 with focus on wholesale banking to cover lending, trade finance and factoring services to US-based operations of Indian companies.
The growth of ICICI Bank's international operations was aligned with the needs of ethnic Indian population in the United Kingdom and Canada, and the rapidly growing overseas presence of Indian companies through organic expansion and M&As.
While prospects for NRI-related activity were bright, the liquidity crunch and sharp drop in M&A activity took a toll of the bank's business. This has made the bank scale down its presence in business centres like New York and Singapore. Some persons have been sent back and some have left the organisation, according to sources, but the number of people recalled could not be ascertained.
Indian companies have acquired over 1,000 companies abroad across sectors, providing merchant banking business to Indian banks. This has slowed down considerably.
ICICI Bank is also said to have trimmed its presence in West Asia and South Africa as these regions are also in the midst of a slowdown. Its operations in Russia have also faced economic turbulence. ICICI Bank Eurasia's total assets declined to $441 million as on March 31, 2009, from $772 million as on December 31, 2007.
