ICICI Bank’s U.K., Canada Subsidiaries May Cut Lending to Indian Companies

The U.K. and Canada-based subsidiaries of ICICI Bank Ltd. (ICICIBC), India’s second-largest lender, may cut credit to companies from the Asian nation as regulators order banks to reduce geographical risk.

“We have followed an international growth strategy on India-backed lending,” Chief Financial Officer N.S. Kannan said in an interview today. Regulators “do not want undue concentration of assets on any single overseas geography as part of overall risk management. The balance sheet of our overseas subsidiaries in the U.K. and Canada,” may see a decline.

Western banking regulators are strengthening rules after being forced to bail out lenders during the financial crisis. Taxpayers in the U.K. spent 65.8 billion pounds ($108 billion) rescuing Royal Bank of Scotland Group Plc and Lloyds Banking Group Plc. (LLOY) Regulatory concerns may make it tougher for Indian companies to access cheaper borrowing rates overseas to expand and acquire companies.

Assets of ICICI Bank UK fell 3 percent to $7 billion in the three months ended Dec. 31 from the preceding quarter, according to a presentation on the company’s website. ICICI Bank Canada’s assets have declined 6 percent to C$4.7 billion from C$5 billion in the same period.

“We are proceeding cautiously with respect to our growth strategy for overseas subsidiaries,” said Kannan.

Regulators in the U.K. and Canada objected to ICICI Bank using deposits in the two nations to lend to Indian companies, Times of India reported earlier today.