Bank Muscat to sell its entire stake in HDFC Bank

17 March 2009

Bank Muscat, Oman's largest lender, will sell its entire stake in HDFC Bank as it seeks cash for provisioning for losses relating to both operations and investment, the bank said in a regulatory filing.

Bank Muscat's profit plummeted 83 per cent in the fourth quarter, mainly due to impairment of stocks related to an investment in Pakistan's Saudi Pak Commercial Bank. The bank said it expected 4 to 7 million rials ($10.39 – 18.18 million) in losses in the first quarter related to its equity portfolio.

"During the course of the year the bank will have to repeat the impairment test exercise it carried out last year for testing any potential impairment in value on its Saudi Pak Bank investment," it added.

Bank Muscat held a 2.67-per cent stake in HDFC, worth about Rs948 crore ($185.3 million) at Friday's closing price of Rs834.5 a share.

"We decided to sell our stake in HDFC Bank, India, over a period of time," the company said in a web filing with Omani stock exchange. Pricing and timeframe of the stake sale would depend on the prevailing market conditions, the statement added.

The bank has so far disposed of 40 per cent of its holding in HDFC Bank, the release noted.