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December 14, 2007 |
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ICICI BANK: Stationery Maker Sues Bank Sundaram Multi Pap Ltd has filed a lawsuit in the Bombay High Court against ICICI Bank Ltd alleging that the bank misled the stationery firm into taking derivative positions far beyond its underlying export risks, the Business Standard reports. The suit, the report says, came after the bank demanded that the Sundaram pay about INR6 crore as margin money to cover for losses. “This is a classic case of fancy hedging structures, where exporters convert their dollar receivables into Swiss franc, which has begun to hurt exporters as the otherwise stable Swiss currency has appreciated against the weakening US currency,” BS explains. According to the report, the Bombay-based paper stationery maker asked the court to cancel: -- derivative transactions it entered into with the bank; and -- personal guarantees given by the company's directors for hedging. The paper firm reportedly asserted that the transactions were for speculative purposes and not for hedging. Sundaram Chairman and Managing Director Amrut Shahall alleged that the purpose of the transaction was to hedge export risks but the bank "misguided" them and entered into contracts that breached the limit of INR1.52 crore on a single transaction in Indian rupees and the total annual limit turnover of INR25 crore, BS relates. Headquartered in Mumbai, India, ICICI Bank Limited -- http://www.icicibank.com/ -- is a financial services group providing a variety of banking and financial services, including project and corporate finance, working capital finance, venture capital finance, investment banking, treasury products and services, retail banking, broking and insurance. It also has interests in the software development, software services and business process outsourcing businesses. The Company's operations have been classified into three segments: Commercial Banking, Investment Banking and Others. It has subsidiaries in the United Kingdom, Canada and Russia, branches in Singapore and Bahrain, and representative offices in the United States, China, United Arab Emirates, Bangladesh and South Africa. * * * Fitch Ratings gave ICICI a 'C' Individual Rating. On Aug. 15, 2006, Standard & Poor's assigned its 'BB-' rating to the hybrid Tier-1 securities to be issued by ICICI Bank Ltd. On Oct. 16, S&P assigned its 'BB+' issue rating to its senior unsecured, five-year, fixed-rate U.S. dollar notes. |
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