Foreign institutional investors (FIIs) have trimmed their holdings in 12 private banks in the September quarter amid concerns over a build-up of stress in mid-sized companies and small and medium enterprises (SMEs).
Within the BSE-500 universe, mid-sized private banks are the ones to see deeper cuts in FII stakes. For instance, Karnataka Bank saw its FII stake reduced by 167 basis points (bps) to 13.7 per cent in the September quarter from 15.37 per cent stake in the June quarter.
Federal Bank (246 bps), City Union Bank (133 bps), ICICI Bank (117 bps), HDFC Bank (80 bps), DCB Bank (43 bps), Kotak Mahindra Bank (37 bps), and RBL Bank (20 bps) are the other banks where FIIs have pruned their stakes. Among the above, DCB Bank and Karnataka Bank have reported a rise in slippage in the SME loan book in the September quarter. Management commentary from some of the other private banks also pointed to pressure in SMEs.
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In a recent note, foreign broking house Macquarie pointed out that some foreign investors held an “all-round pessimistic” view of Indian banks. “Investors are worried about second order impacts from new stress emerging in the mid-corporate and SME space, as well as rub off effect on retail asset quality,” the Macquarie note read.
The report was based on interactions with 40-odd investors based out of Singapore and Hong Kong.
Within the BSE-500 universe, mid-sized private banks are the ones to see deeper cuts in FII stakes. For instance, Karnataka Bank saw its FII stake reduced by 167 basis points (bps) to 13.7 per cent in the September quarter from 15.37 per cent stake in the June quarter.
Federal Bank (246 bps), City Union Bank (133 bps), ICICI Bank (117 bps), HDFC Bank (80 bps), DCB Bank (43 bps), Kotak Mahindra Bank (37 bps), and RBL Bank (20 bps) are the other banks where FIIs have pruned their stakes. Among the above, DCB Bank and Karnataka Bank have reported a rise in slippage in the SME loan book in the September quarter. Management commentary from some of the other private banks also pointed to pressure in SMEs.
FIIFII
In a recent note, foreign broking house Macquarie pointed out that some foreign investors held an “all-round pessimistic” view of Indian banks. “Investors are worried about second order impacts from new stress emerging in the mid-corporate and SME space, as well as rub off effect on retail asset quality,” the Macquarie note read.
The report was based on interactions with 40-odd investors based out of Singapore and Hong Kong.
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