Standard Chartered halts accepting Adani Group bonds as collateral: Report
Standard Chartered, a British bank, has stopped accepting Adani Group bonds as collateral for margin loans. This comes after Citigroup and Credit Suisse announced similar measures, both of which stopped lending on Adani Group’s dollar bonds.
Following the publication of a lengthy, damning report on the company by US short-seller Hindenburg Research, the Gautam Adani-led conglomerate is facing allegations of stock manipulation, accounting fraud, and other malpractices.
According to the Economic Times, some StanChart relationship managers reportedly informed their private wealth clients in Asia’s major markets, including Singapore, that the bank would not accept these bonds as collateral. According to the report, the decision is only temporary and was made on Friday.
According to a senior banker, such safeguards are in place to protect the bank and its clients, and the lender has a comparatively small exposure to these securities. He explained that the decision was influenced by the price movements of the underlying pledged stock.
Credit Suisse, the first to refuse Adani bonds, assigned a zero lending value to notes issued by Adani Ports and Special Economic Zone, Adani Green Energy, and Adani Electricity Mumbai. It previously offered a lending value of approximately 75% for the Adani Ports notes.
Citigroup quickly followed suit. According to an internal memo from the group’s wealth arm, the company’s stock price dropped dramatically as a result of the negative news about the group’s financial health. According to the memo, the lender has decided to remove lending value from all Adani-issued securities with immediate effect. It stated that the decision will have a minor impact on its margin lending portfolio.
In the midst of the Adani-Hindenburg feud, in which both parties issued lengthy responses to each other’s accusations, the conglomerate withdrew its fully subscribed Rs 20,000-crore follow-on public offer (FPO). Gautam Adani stated that proceeding with the FPO in such a volatile market would be morally wrong.
“For me, the interest of investors is paramount and rest everything is after that,” he said.
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