Japanese banks stand by Gautam Adani's Adani Group despite US bribery charges: Report

Japan's largest banks along with some Middle Eastern banks are planning to still maintain ties with billionaire Gautam Adani despite US bribery charges

Japan’s largest banks, along with several Middle Eastern financial institutions, are reportedly planning to maintain their ties with billionaire Gautam Adani, even as some lenders, such as Barclays Plc, reconsider their exposure to the Adani Group.

Gautam Adani speaks during an inauguration ceremony after the Adani Group completed the purchase of Haifa Port (Reuters)

The development comes amid allegations of a $250 million bribery scheme involving Indian government officials to secure solar power contracts at inflated prices, Bloomberg reported.

The Adani Group has strongly denied the accusations, calling them “baseless.”

Japanese banks on Adani

Major Japanese banks, including Mizuho Financial Group Inc, Sumitomo Mitsui Financial Group Inc, and Mitsubishi UFJ Financial Group Inc, are maintaining their support for the Adani Group despite allegations of a $250 million bribery scheme, Bloomberg reported.

Mizuho Financial Group expects the charges to have minimal long-term impact and plans to continue backing the conglomerate, with the potential for new financing in the future, the report stated.

The banks’ continued support stems from their view of India as a key growth market. “They are unlikely to significantly reduce their overall India exposure,” said Ben Charoenwong, assistant finance professor at INSEAD in Singapore. He added that Japanese lenders have developed sophisticated frameworks for assessing emerging-market risks, drawing from their experiences in Southeast Asia during the 1990s. While they may tighten processes or adjust risk premiums for certain deals, the banks remain committed to their investments.

Additional factors influencing their decision include Adani’s strong ties with the Indian government, the banks’ backing of cash-generating assets such as ports and airports, and the expectation that legal proceedings in the US will be protracted.

The Adani Group has denied the bribery allegations, calling them “baseless.” Despite this, other global lenders like Barclays Plc are reassessing their exposure to the conglomerate, raising questions about the group’s ability to secure future financing.

Middle East banks on Adani

Some Middle East banks like the Emirates NBD Bank PJSC are as unfazed about their relationship with Adani as the Japanese are with no plans to pull back from existing commitments and even being willing to lend more for future projects, the report read.

“Japanese and Middle Eastern banks, with access to relatively low-cost capital, are actively exploring global growth and diversification opportunities,” the report quoted Ashutosh Mishra, head of research at the institutional desk of Ashika Stock Broking Ltd as saying. “This creates a synergistic fit with asset-heavy Indian conglomerates like Adani, which offer a robust growth outlook.”

Other global banks on Adani

In sharp contrast, other banks in concern for their reputation, have gone the other way. For instance, Barclays which has long been Adani's go-to bank, has stopped financing the group for now, the report read.

It is a similar case with Jefferies Financial Group Inc which hasn't still made the formal decision to completely halt deals with the group, according to the report which added that two other US-based banks are in the same situation.