Things seem to be going from bad to worse for Adani group.?
If the bloodbath in Adani group shares and the U-turn it recently had to take regarding its $2.5 billion share sale weren't enough, lenders across the globe are now beginning to take action?to step away from the rattled business group.
As of today morning,?Adani group's market losses have hit $100 billion as its stocks continue to sink.
Switzerland's second-biggest bank Credit Suisse and Citigroup¡¯s wealth arm have stopped loans to Adani Group.
Citi Group has halted accepting securities of Gautam Adani¡¯s group of firms as collateral for margin loans as banks ramp up scrutiny of the Indian tycoon¡¯s finances following allegations of fraud by short-seller Hindenburg Research, as per Bloomberg.
The US lender¡¯s move to restrict lending comes shortly after a similar action taken by Credit Suisse Group as Adani¡¯s beleaguered empire becomes further engulfed in crisis.?Shares of?Adani Enterprises?crashed over 30% in Wednesday's trade, amid reports of?Credit Suisse stopping the acceptance of bonds of Adani companies as collateral for margin loans to its private banking clients.
¡°In recent days, we have seen a dramatic price drop of Adani issued securities," Citigroup said in an internal memo. ¡°Stock and bond prices have plummeted following the negative news around the group¡¯s financial health."?
The bank said in the memo it has decided to remove lending value ¡°to all Adani issued securities with immediate effect." Based on its estimates, the impact of this decision to its margin lending portfolio is limited, it said, as per the report.
Bonds of the Adani Enterprises have plunged to distressed levels in US trading, and the company abruptly pulled a record domestic stock offering after shares in the Adani group suffered a $92 billion crash.?
As per the report, when a private bank cuts lending value to zero, clients typically have to top up with cash or another form of collateral and if they fail to do so, their securities can be liquidated.
At Credit Suisse, the Swiss lender¡¯s private banking arm has assigned a zero lending value for notes sold by Adani Ports and Special Economic Zone, Adani Green Energy and Adani Electricity Mumbai Ltd., according to people familiar with the matter.?The Swiss bank had previously offered a lending value of about 75% for the Adani Ports notes.
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