Adani-Hindenburg: A senior Standard Chartered banker stated that the lender has fairly little exposure to these instruments and that such precautions are taken to protect the bank and the clients.
Standard Chartered, a British lender, has ceased using Adani Group bonds as a security for margin loans. After Citigroup and Credit Suisse both ceased making loans secured by dollar bonds issued by the Adani Group, they took similar actions.
Following the publication of a lengthy, damning study on the business by US short-seller Hindenburg Research, the Gautam Adani-led conglomerate is facing accusations of stock manipulation, accounting fraud, and other wrongdoings.
The Economic Times claimed that several StanChart relationship managers allegedly warned their private wealth clients in Singapore and other significant Asian markets that the bank would not accept these bonds as security. The decision was made on Friday and is temporary, according to the article.
A senior banker told the newspaper that the institution has a relatively small exposure to these products and that such precautions are taken to protect the bank and the clients. The choice, according to him, depended on changes in the value of the underlying pledged shares.
For notes released by Adani Ports and Special Economic Zone, Adani Green Energy, and Adani Electricity Mumbai, Credit Suisse, which was the first to discontinue recognizing Adani bonds, gave a zero lending value. For the Adani Ports notes, it had previously given a loan value of around 75%.
Citigroup quickly adopted a similar strategy. The group’s wealth arm said in an internal document that the company’s price fell sharply in the wake of the bad news regarding the group’s financial condition. According to the document, the lender has decided to immediately stop financing all securities issued by Adani. It claimed that this choice will only have a minor effect on its portfolio of margin loans.
The company withdrew its fully subscribed Rs 20,000 billion follow-on public offer amid the Adani-Hindenburg dispute, in which both parties issued long responses to one another’s claims (FPO). According to Gautam Adani, continuing with the FPO in the face of such market unpredictability would not be morally acceptable. The investor’s best interests come first, he said, and everything else comes second.