Bank of Baroda, Central Bank, IDBI Bank Shares Plunge Sharply, Investors Lose Nearly Rs 7,100 Crore

The share price of few banking stocks, especially Central Bank of India, Bank of Baroda and IDBI Bank plunged sharply on Wednesday as Go First filed for bankruptcy. These three banks were the lenders were among the leading financial creditors for the Wadia Group-owned low-budget carrier.

As the low cost, debt-ridden, cash-strapped Indian airline, Go First owes five banks a total of Rs 6,521 crore. Other than the above-mentioned names, Axis Bank and Deutsche Bank were the other two lenders of the company. The airline's financial difficulties may impact the lenders' ability to recover their loans, which triggered a sell-off in these counters.

Share price of Central Bank of India, was down around 7 per cent during the day's trade and later it ended 5.13 per cent lower over previous day's closing at Rs 28.65 per share on Wednesday,.

While share price of Bank of Baroda plunged nearly 4 per cent during the day but however it did inch up slightly to close at nearly 1.86 per cent on intra day basis to Rs 184.60 per share.

IDBI Bank shed 3 per cent to Rs 53.20 in morning trade, but later ended nearly 1.76 per cent over previous day's session.

All the three lenders did stage some recover hence they ended marginally low over previous days closing prices. Even Axis Bank stock price slipped by nearly 1.22 per cent to Rs 859 per share during the end of the day.

Collectively, the five banks owed Rs 6,521 crore to the airlines, while investors of the aforementioned three banks notionally lost up to Rs 7,100 crore at the opening tick.

The market capitalisation of these Central Bank of India, Bank of Baroda and IDBI Bank was cumulatively down by Rs 7,096 crore.

Central Bank of India has the highest exposure of Rs 1,561.6 crore in Go First, while the Bank of Baroda has an exposure of Rs 1,429.82 crore. Deutsche Bank has an exposure of Rs 1,320 crore. However, IDBI Bank's exposure in Go First is quite small at Rs 58.58 crore. Axis Bank, which has an exposure of Rs 30 crore in the defunct airlines, was trading flat.

Wadia group-owned Go First on Tuesday said it has filed for insolvency resolution and can no longer continue to meet financial obligations, blaming US company Pratt & Whitney's 'faulty engines' for grounding 50 per cent of its fleet.

All flights of Go First were suspended for May 3-5. Go First made its highest annual financial loss to date in fiscal 2022. For several months, the airline lost significant business in an otherwise upbeat domestic aviation market, adding to the woes of the carrier. The company, which was looking for its listing since 2015, deferred its IPO quite a few times until it finally filed for insolvency.