ICICI Bank 2006 Annual Report Download - page 36

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Annual Report 2005-2006
The branch network of ICICI Bank UK was also expanded with the opening of branches in Leicester,
Manchester and London in UK and Antwerp in Belgium. The direct banking strategy rolled out in Canada
was also replicated successfully in UK. The Bank continues to leverage India-based delivery skills by
outsourcing several back office operations from the UK and Canada subsidiaries to central processing
shops in India. The Russian subsidiary was established through the acquisition of a Russian bank with
total assets of about USD 4.4 million.
To lay the foundations for the global payments business, Euro Banking Association approval for ICICI
Bank UK to become STEP 1 member for Euro clearing has been obtained. The Bank, through its Hong
Kong branch, is the first Indian bank to become a Direct Participant (DP) in the US dollar clearing in Hong
Kong. The Real Time Gross Settlement (RTGS) in the US dollar provides a vital link for payment settlements
in US dollars in Asia.
The Bank has also consolidated the global remittance initiative, targeting non-Indian communities, by
leveraging its core capabilities of technology-based service delivery. A large number of remittance products
were introduced to complement the existing suite of products. The business focus has been on rolling out
successful products across multiple geographies and getting into high volume correspondent arrangements.
The Bank is also leveraging its disbursement capability in India and looking at active customer acquisition
within the country using card and account based products targeted at beneficiaries in India.
The Bank is now a preferred partner for Indian companies for syndication of external commercial
borrowings and other fund raising in international markets. The Bank focussed on increasing market
share in trade finance by leveraging and further strengthening correspondent banking relationships.
The Bank strengthened its international private banking offering to service the wealth management needs
of the large and growing population of affluent and high net worth customers. With a portfolio of in-
house and third party products, the bank has created a holistic product suite across the entire risk spectrum
starting from deposits and bonds to the more complex structured derivative products, private equity and
real estate. The Bank entered into alliances with leading international product providers to offer private
banking solutions.
RISK MANAGEMENT
Risk is an integral part of the banking business and we aim at delivering superior shareholder value by
achieving an appropriate trade-off between risk and returns. We are exposed to various risks, including
credit risk, market risk and operational risk. Our risk management strategy is based on a clear understanding
of various risks, disciplined risk assessment and measurement procedures and continuous monitoring.
The policies and procedures established for this purpose are continuously benchmarked with international
best practices.
We have two dedicated groups, the Risk Management Group (RMG) and the Compliance & Audit Group
(CAG) which are responsible for assessment, management and mitigation of risk in ICICI Bank. These
groups form part of the Corporate Centre, are completely independent of all business operations and are
accountable to the Risk and Audit Committees of the Board of Directors. RMG is further organised into
the Credit Risk Management Group, Market Risk Management Group, Retail Risk Management Group
and Operational Risk Management Group. CAG is further organised into the Credit Policies, RBI Inspection
& Anti-Money Laundering Group and the Internal Audit Group.
Credit Risk
Credit risk is the risk that a borrower is unable to meet its financial obligations to the lender. We measure,
monitor and manage credit risk for each borrower and also at the portfolio level. We have standardised
credit approval processes, which include a well-established procedure of comprehensive credit appraisal
and rating. We have developed internal credit rating methodologies for rating obligors. The rating factors
in quantitative, qualitative issues and credit enhancement features specific to the transaction. The rating
serves as a key input in the approval as well as post-approval credit processes. Credit rating, as a concept,
has been well internalised within the Bank. The rating for every corporate borrower is reviewed at least
annually. Industry knowledge is constantly updated through field visits and interactions with clients,
regulatory bodies and industry experts.