Standard Chartered stops accepting Adani dollar bonds after Citigroup, Credit Suisse

British lender Standard Chartered has stopped accepting Adani Group bonds as collateral on margin loans. This comes after similar measures were announced by Citigroup and Credit Suisse, both of which stopped giving loans on dollar bonds by Adani Group. Gautam Adani-led conglomerate is battling allegations of stock manipulation, accounting fraud and other malpractices, after US short-seller Hindenburg Research published a lengthy, damning report on the company. 

Some StanChart relationship managers have reportedly informed their private wealth clients in Asia’s large markets, including Singapore, that the bank would not accept these bonds as collateral, according to a report by the Economic Times. The decision is temporary, and was taken on Friday, the report stated.  

A senior banker told the daily that such safeguards are taken to protect the bank and the clients, and that the lender has a comparatively tiny exposure to these securities. The decision, he said, was a function of the price movements of the underlying pledged stock. 

Credit Suisse, that was the first to stop accepting Adani bonds, assigned a zero lending value for notes sold by Adani Ports and Special Economic Zone, Adani Green Energy and Adani Electricity Mumbai. It earlier offered a lending value of about 75 per cent for the Adani Ports notes.

Citigroup soon followed suit. In an internal memo, the group’s wealth arm said that the company saw a dramatic price drop following the negative news on the group’s financial health. The lender reportedly said in the memo that it has decided to remove lending value to all Adani-issued securities with immediate effect. It said that the impact of this decision to its margin lending portfolio is limited.

Amid the Adani-Hindenburg row that saw both sides issue lengthy response to each other’s accusations, the conglomerate withdrew its fully-subscribed Rs 20,000-crore follow-on public offer (FPO). Gautam Adani said that it would not be morally correct to go ahead with the FPO amid such market volatility. "For me, the interest of investors is paramount and rest everything is after that," he said. 

Also read: Hindenburg impact: Credit Suisse stops accepting bonds of Adani Group firms, says report

Also read: Citigroup’s wealth arm stops accepting Adani Group securities