Subprime Tsunami on

Indian Shores: Crisis hits

ICICI
GROUP 12
RAVI TEJA MAHAVADI (PGP15089)
RUNZUN KONKANE (PGP16037)
RACHIT PRADHAN (PGP16163)
SHASHI PRAKASH SINGH (PGP16171)
VIVEK BHANUSHALI (PGP16190)
 Global Financial Crisis

Started in early 2007

Banks started recalling the bad mortgage debt, the real state
bubble burst leading to the subprime crisis

Quickly evolved into a general credit crisis due to a large number of

questionable assets on the banks balance sheets, such as collatarized debt
obligations or mortgage backed securities

In July 2008, US financial authorities stepped in to assist Americas largest lenders,

Fannie Mae and Freddie Mac, the impact was fest in stock markets across the
globe.

Complete evaporation of liquidity

Impact on Indian Banks
Indian market gets affected by the global financial market through trade,
financial and expectation channels

Loss of $2 Billion because of direct or indirect exposer.

In August 2007, UBS reported ICICI bank had exposure to the US subprime
market.

ICICI had US$360 million exposure to the collateralized debt obligation(CDO).

Later Vishakha Mule, CFO for ICICI bank clarified that ICICI had exposer to CDO
and credit default swaps but there was no exposure to the subprime

ICICI, largest holdings of overseas investments reported a loss of $264 Million

which was biggest loss by any Indian bank due to exposure to subprime market

SBI reported a loss of $20 Million

 ICICI Bank
July 2007-
Largest Private
March 2008-
Sector bank in
May 1994- 2000- Largest Largest issuer
Market
Incorporation Chain of ATMs of credit
capitalization
in India cards in india
and Second in
terms of
overall assets

Best E- Banking
2005- 1st Project
1997- Infinity 2008- Implementation
Indian bank
1st Indian iMobile, full Award, 2008
to offer trade
Internet service
financing for Gartner Business
Banking mobile Intelligence
enterprise
platform Excellence
through CIB Award for Asia
Pacific, 2009
 INTERNATIONAL OPERATIONS

International Banking Group, 2002

Incorporation of Subsidiaries

May 2005- Launch Of Online Savings Account Product HiSAVE in UK

Sept 2008- wholly owned subsidiaries in UK, Canada Russia

Focus on NRI population

 March 2008 The Fall

Net Income- US$9.01 Billion Quarter June 2008 - 6.1% fall in

quarterly growth
PAT- US$ 0.924 Billion
Attribution to NPAs and Successive
Growth - 37% speculation

CAGR > 44% over the five years 2008 figures (Cons.)

Interest + Fee Income Growth > 40% ROA- 7.63%

Gross Asset - 3% ROE- 0.71%

NPA- 1.39%

End of March 2008, Quarterly growth-

39.4%
Communication

Print
Online
Electronic media
Print
Online
Electronic

E-mails
SMS
Telephone calls
Website
Also used mediums like TV shows(Kaun Banega Crorepati) and movie
platforms(Baghban) for their product placement
 TVC with Amitabh Bachchan

https://www.youtube.com/watch?v=fE9wPLCf-LI
Crisis : 3 Price dips

Sep 9-
Oct
27
(over
55%)
Feb 18- May 20-
Mar 19 July
(over 15(over
35%) 45%)
After effects : Market Sentiments

Investors lost confidence and hence P/E ratio declined from 34.7 to
7.6
HDFCs stock declined around 37% whereas ICICI over 70%
Investors sentiment turned negative b/w Jan and Oct2008
Media Sentiments
Post Crisis : Post Crisis : Online
Before Crisis Mainstream media media
FOP(follow-on- Media focused
Cristicism of
public offering) mostly on NPAs and
customer service
Media reported MTM
Harrassment by
ICICIs efforts to Banks press
collection agents
raise funds abroad statements, analysts,
Blog post : ICICI
Reported as rapidly regulators
Bank a bad
growing in comments were
experience for
insureance and reported
many (960
mutual funds biz too responses)
Reactions

Media Stakeholders
Analysts and Rating
On Sept 16, 2008 ,
agencies helped
Regional TV channel in
customers and
Tamil Nadu announced
shareholders
collapse of ICICI
Blog : Inidan Investment
Speculations increased
Blog rated ve and
online
showed the numbers
Print and TV also aired
were hiding the full truth
public concerns
ICICI Crisis Response: Press Releases

https://www.youtube.com/watch?v=7QFcMgjN2Cs
2 nd Press Release

https://www.youtube.com/watch?v=gNVZSz3jmj8
Results

Investor confidence kept falling

Communication strategies like PR and one-on-one interviews failed
RBI and Govt of India had to step in supporting ICICI and other
banks
ICICI and Indian Banking sector are protected
This led to recovery in stock prices and confidence built up again
Recommendations: Khayal Apka
Campaign

https://www.youtube.com/watch?v=ABoVEWpzqrY
Khayal Apka..2

https://www.youtube.com/watch?v=perLXM30Yt8
Learnings

Not necessarily the same communication strategy will work in all

circumstances
New customer specific campaigns could have been implemented
Could have taken the help from Govt and RBI to rebuild the trust