Moody's: Oriental Bank of Commerce outlook negative

Moody's Investors Service said it changed the outlook on Oriental Bank of Commerce's ratings to negative from stable, including its D+ bank financial strength rating and A3/P-1 global local-currency deposit ratings.

The agency believes that the bank's ratings may come under pressure mainly due to its relatively low capacity to raise tier 1 capital in order to absorb potential losses from a future deterioration in asset quality, as its government shareholding is close to the required minimum of 51%. And compared with other similarly rated banks in India, Oriental Bank of Commerce appears vulnerable to the possibility of an acute asset quality stress, in Moody's view.

Following the recent change in the credit outlook for the Indian banking system to negative from stable, Moody's expects the asset quality positions of all Indian commercial banks to come under increasing pressure as the real economy weakens under the influence of the global economic downturn.

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