Citigroup’s wealth arm halts accepting Adani Group securities

Citigroup Inc’s wealth arm has stopped accepting Adani Group securities as collateral for margin loans. This comes as banks ramp up scrutiny of the Gautam Adani-led conglomerate’s finances following the Hindenburg report that accused the group of stock manipulation and accounting fraud. According to a report by Bloomberg, Citigroup said in an internal memo that they have seen a dramatic price drop of Adani issued securities. “Stock and bond prices have plummeted following the negative news around the group’s financial health,” they had said, as per the report. 

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. Citigroup is yet to issue a comment. The US lender’s move follows a similar decision by Credit Suisse Group. The private banking arm of Credit Suisse AG has stopped accepting bonds of some of the group entities of Adani Group -- Adani Ports & SEZ, Adani Green Energy, and Adani Electricity Mumbai – as collateral for margin loans. 

Adani Enterprises, on late Wednesday night, announced that it would withdraw its fully-subscribed Rs 20,000-crore follow-on public offer (FPO). In an exchange filing, the company said that the decision was made “given the unprecedented situation and the current market volatility” and the company’s aim to protect the interest of its investing community. The firm's stock closed trading on Wednesday 28.5 per cent lower at Rs 2,128.70.

Gautam Adani reiterated the same in a video statement on Thursday morning. He thanked investment bankers, institutional investors and shareholders, within and outside India, for supporting the FPO. He said he has been blessed to receive overwhelming support from all stakeholders and particularly from the investor community in his four-decade journey as an entrepreneur.