Citi group cuts stake in HDFC to 9.9 %
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Citi group on Tuesday said it has reduced its stake in mortgage lender HDFC to 9.9 per cent from 11.4 per cent, a deal the US bank said would give it a pre-tax profit of about $160 million.
Citi group sold 1.5 per cent holding in Housing Development Finance Corp (HDFC).
“Reducing its holdings in HDFC to below 10 per cent is part of Citi’s mitigation efforts ahead of the adoption of Basel-III capital rules,” Citi group said in a statement.
Citigroup said it had no plans to sell any additional shares of HDFC.
“This transaction was motivated by our capital planning as we prepare for the implementation of Basel-III, rather than strategic considerations,” Citi group chief financial officer John Gerspach said.
“Citi remains deeply committed to India and we continue to invest in our franchise in this very important market,” Citi India chief executive officer Pramit Jhaveri said.
The move by Citi was aimed at bringing down its holding in HDFC to below 10 per cent in order to avoid setting aside additional capital under the new international Basel-III agreement on bank capital requirements.
Citi held a 11.38 per cent stake in HDFC through Citi group Strategic Holdings Mauritius and Citi group Holdings Mauritius as of March 31, 2011.
Reacting to the news, shares of HDFC fell by 2.20 per cent to touch an early low of Rs 643 on the BSE.
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