Citigroup Inc.’s treasury department has stopped accepting securities from Gautam Adani’s group of companies as collateral for additional loans as banks begin to scrutinise the Indian boy’s finances amid allegations of fraud by short-seller Hindenburg Research.
US lenders have moved to curb lending following a similar move at Credit Suisse Group AG as Adani’s struggling empire plunges deeper into crisis.
“In recent days, we have seen a dramatic decline in the prices of securities issued by Adani,” Citigroup said in an internal memo seen by Bloomberg News. “The prices of shares and bonds fell sharply due to negative news about the financial position of the group.”
The bank announced in a note that it had decided to “immediately write off the loan value of all the securities issued by Adani.” It expects the impact of this decision on its margin loan portfolio to be limited, it said. Citigroup declined to comment. The Indian billionaire’s top bond fell
In US trading, and the company suddenly launched a record domestic stock offering after Adani Group shares fell by $92 billion.
When a private bank cuts lending to zero, customers are usually required to post cash or other collateral, failing which their securities may be liquidated.
Credit Suisse’s private banking arm assigned a zero credit rating to bonds sold by Adani Ports and Special Economic Zone, Adani Green Energy, and Adani Electricity Mumbai Ltd., according to people familiar with the matter who asked not to be identified to discuss personal data.
