Japanese Banks Maintain Support for Adani Amid US Bribery Charges

Japan’s leading banks have announced plans to continue their support for billionaire Gautam Adani, despite recent US bribery charges against him and his group. This decision comes at a time when several global financial institutions, including Barclays, are re-evaluating their associations with the Indian conglomerate.

Sturdy Support from Japanese Banks

Mizuho Financial Group, Sumitomo Mitsui Financial Group, and Mitsubishi UFJ Financial Group are among the major Japanese banks that have expressed no intention of severing ties with the Adani Group. As per sources familiar with the matter, Mizuho believes that the bribery saga will not lead to sustained negative consequences for the conglomerate. Both Sumitomo and Mitsubishi UFJ also remain open to offering new financing when required.

Contrast with Global Firms

The support from Japanese banks highlights a significant contrast with other financial firms, which are pulling back in light of allegations against Adani. The US has charged Gautam Adani and others with involvement in a $250 million bribery scheme aimed at securing government contracts for solar energy projects. The Adani Group has categorically denied these allegations, branding them as baseless. In response to the controversy, representatives from Adani have been engaging with various lenders and investors to clarify their position.

Long-Term Confidence in Adani’s Business

While new financing requests from Adani may not be imminent, there is a sense of reassurance among Japanese banks due to Adani's significant cash-generating assets. The closer relationship with the Indian government also gives these banks a level of confidence that any potential legal issues from the US will take time to resolve. Financial experts have noted that Japanese banks have learned from past regional crises and have developed strong frameworks to assess risks in emerging markets.

Global Banks’ Diverging Strategies

In contrast, Barclays has decided to suspend new loans and financing for the Adani Group, a shift following the allegations and subsequent scrutiny of its relationship with the conglomerate. The British bank had been reducing its engagement with Adani for some time and had recently participated in a trade-finance facility for one of its solar projects.

Jefferies' Dilemma

Similarly, Jefferies Financial Group has yet to make definitive decisions regarding its dealings with Adani after the indictment. The firm, which had previously supported Adani amidst scrutiny from short sellers, is now waiting for a clearer outcome from the legal proceedings before engaging in further transactions.

Market Reactions and Future Considerations

The market reacted to the news of the bribery charges with a drop in Adani’s stock prices and bonds. Major credit rating agencies have since downgraded their outlooks on several Adani companies, citing concerns about their access to funding and rising financing costs. Additionally, other international firms, such as TotalEnergies, have opted to pause new investments in Adani until further clarity is achieved regarding the legal situation.

Despite the turbulence, Japanese and some Middle Eastern banks remain optimistic about their relations with Adani. With low-cost capital and a desire to explore growth opportunities, these banks see strong potential in partnering with established Indian conglomerates like Adani, which continue to present a robust growth trajectory.

Overall, while Japanese banks affirm their commitment to Adani, the continuing fallout from the allegations could influence their risk assessments and future dealings.

banks, Adani, finance