JAPAN’S BIGGEST BANKS PLAN TO MAINTAIN TIES TO ADANI GROUP DESPITE US BRIBERY CHARGES
Mizuho Financial Group, Sumitomo Mitsui Financial Group, and Mitsubishi UFJ Financial Group are expected to continue supporting Adani Group, despite US bribery charges against the Indian conglomerate.
According to sources familiar with the matter, these Japanese banks are not planning to pull back from their exposure to Adani, citing the company’s strong cash-generating assets and government ties. They believe that the legal processes brought by the US will take a long time to resolve and will not have a long-lasting impact.
OTHER GLOBAL FIRMS REEVALUATE EXPOSURE TO ADANI
In contrast, some global firms are reassessing their ties to Adani. Barclays, which had been gradually decreasing its exposure to the group, has suspended extending new loans or financing to Adani. Jefferies Financial Group is also being cautious, with no decision made on whether to pause or halt deals with the group.
JAPANESE BANKS’ RISK TOLERANCE
"Drawing from their experiences in South-east Asia in the ’90s, Japanese banks have developed sophisticated frameworks for evaluating emerging-market risks," said Ben Charoenwong, an assistant finance professor at Insead in Singapore. "Banks such as MUFG and SMBC, which view India as a crucial growth market, are unlikely to substantially reduce their overall India exposure."
OTHER DEVELOPMENTS
- Adani’s dollar bonds and stocks tumbled following the indictment, with S&P Global Ratings, Moody’s Ratings, and Fitch Ratings lowering their credit outlooks on some Adani companies.
- TotalEnergies and Kenya have reassessed their ties to Adani, with the latter cancelling two contracts worth about $2.6 billion.
- Adani’s stock has recouped some losses after the company said Gautam Adani and his aides have not been charged under the US Foreign Corrupt Practices Act.
CONCLUSION
Japanese banks are taking a cautious approach to Adani Group, while some global firms are reassessing their exposure. The divide highlights the challenges of navigating complex legal and reputational risks in the global financial market.
FAQs
Q: What are the US bribery charges against Adani Group?
A: The US has accused Adani Group and its executives of plotting a $250 million scheme to bribe Indian government officials to win solar energy contracts.
Q: How have Japanese banks responded to the charges?
A: Mizuho, Sumitomo, and Mitsubishi UFJ are expected to continue supporting Adani Group, citing its strong cash-generating assets and government ties.
Q: What is the impact on Adani’s stock price?
A: Adani’s dollar bonds and stocks tumbled following the indictment, but have since recouped some losses.
Q: Which global firms are reassessing their ties to Adani?
A: Barclays, Jefferies Financial Group, and TotalEnergies are among the firms to have reevaluated their exposure to Adani.
