Following the path taken by many foreign banks (Carlyl, Barclays etc) in selling off their stakes in Indian ventures, American bank Citi has sold off its stake in the Indian bank- HDFC. Sources with a knowledge of the happenings have said that the deal valued Rs 95.5 billion ($ 1.9 billion). While the details of the deal aren't public yet, Citi sold 145.3 million shares at 657.7 rupees a piece an unidentifiable source said. The shares were sold off at a discount of 6.2 percent to HDFC's closing price yesterday.
Banks are under pressure to boost capital and are thus selling off their stakes as raising capital from the markets is difficult in these times. The cash flows would take a different turn this time as a major cash flow would be from selling off assets. It is opined by knowledge bearers that the European and American banks are relatively weaker than the Asian banks.
Recently, HSBC after selling out assets in Thailand and Korea, has revealed to its customers that it would soon withdraw from consumer banking from Japan by closing down six branches . Carlyl group divested 20 million shares in HDFC for 677 rupees a piece or 13.5 billion rupees. Recently, Goldman Sachs raised $1.1 billion selling shares of the world's most profitable bank, Industrial and Commercial Bank of China Ltd.
Is it difficulty in operating in the Asian countries that is leading to such a sale of stocks in Asian banks when they are much more profitable and more stable than those performing assets in the US and Europe?
-Priyanka Reddy Kondaveeti
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