Based on experts’ estimates, the impact of this decision will be limited to its margin lending portfolio. That is, Citigroup’s wealth unit will not lend only against securities. Citigroup has refused to make any official comment in this matter.
New Delhi: Banks have started probing the Indian tycoon’s finances following allegations of fraud by short seller Hindenburg Research. Here, after Credit Suisse, now Citigroup Inc’s Wealth Unit has refused to accept securities of Gautam Adani Group firms as collateral for margin loans. The US lender’s move to restrict lending comes after similar changes at Credit Suisse Group AG. Market experts say that this may increase the problems of the already troubled Adani group.
Citigroup said in an internal memo seen by Bloomberg News that in recent days, we have seen a dramatic decline in the prices of securities (bonds) issued by Adani. The bank said in the memorandum that it has ‘decided not to lend against all securities issued by Adani with immediate effect. Based on experts’ estimates, the impact of this decision will be limited to its margin lending portfolio. That is, Citigroup’s wealth unit will not lend only against securities. Citigroup has refused to make any official comment in this matter.
The bonds of the Indian billionaire’s flagship firm have plunged to crisis-hit levels in US trading and Adani Group’s shares plunged $92 billion after the company abruptly called off its FPO offer. When a private bank reduces the Lending Value to zero, customers can usually top up with cash or some other form of collateral. If they fail to do so, their securities can be liquidated (can be sold in a way).
Earlier on Wednesday, after Credit Suisse, Citigroup has also banned giving margin loans against bonds of Adani Group companies. Credit Suisse is a global investment bank and financial services firm. Its headquarter is in Switzerland. Earlier this bank used to give loans to its clients against the bonds of Adani Group companies, but now it will not do so. All the 10 listed stocks of Adani Group fell sharply after a report following Credit Suisse’s moratorium on bonds of Adani Group companies.
According to a Bloomberg report, Credit Suisse has set zero lending (borrowing) value for the bonds sold by Adani Ports and Adani Green Energy and Adani Electricity Mumbai Limited.