LICHF could be exposed to greatest risk: Goldman Sachs

MUMBAI: According to Goldman Sachs it is difficult to estimate the potential loss to book value for the companies involved loan scam. It is of the view that LIC Housing Finance is at a greater risk than Punjab National Bank and Bank of India.

“It is not clear if the investigation pertains to one or multiple loans, the extent of the loan amounts involved, and the collateral the banks hold against these loans. It is therefore difficult to estimate the potential loss to book value for the three companies, if any.

We believe LIC Housing Finance could be exposed to the greatest risk. Punjab National Bank’s and Bank of India’s exposure to corporate loans as a percent of total loans are 4.7% and 3.3% compared to 11% (up from 8% a year ago) for LICHF, and the arrest of LICHF’s CEO could have a greater impact on the company’s future growth strategies (LICHF had grown disbursements by 70% yoy and loan book by 38% yoy in FY10 and 37% each in 1HFY11), whereas for PNB and BOI the officials were less senior and therefore less likely to impact the overall functioning of the bank,” the report said.