Following the subprime crisis in the global market, the foreign operations of ICICI Bank, India’s second largest bank, had reported a mark-to-market (MTM) loss of $264.34 million (around Rs 1,060 crore) from its exposure to credit derivatives and investments as on January 31 this year. The bank said investment losses caused by market turmoil in the wake of the subprime crisis could wipe up to 9 per cent off this year’s profit.

The bank’s shares tanked by about 9 per cent on the Bombay Stock Exchange after Union minister of state for finance P K Bansal, in a written reply to a question in Rajya Sabha, put the MTM losses of the bank at $ 264.34 million as on January 31, 2008.

“We don’t have any direct exposure to subprime. It’s not technically a subprime loss,” joint managing director Chanda Kochhar told reporters. She said the bank will book ‘mark-to-market’ loss of $70 million on its investments in this quarter as credit spreads have widened due to subprime crisis. “We have accounted for the loss of about $ 90 million up to December 2007. In this quarter, we have provided for a marked-to-market loss of about $70 million - $ 50 million in ICICI Bank and another $ 20 million in ICICI Bank subsidiaries,” Kochhar said.

ICICI Bank and its overseas banking subsidiaries have an aggregate exposure of $ 2.2 billion in credit derivatives. As of January 31, 2008, the mark-to-market negative on this portfolio due to movement of credit spreads was about $ 155 million of which $ 88 million had been provided for in the bank ‘s financial statements for the nine months ended December 2007.

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