Moody’s acts on Indian public sector banks

Moody's Investors Service said it affirmed the local and foreign currency bank deposit ratings of the following seven Indian public sector banks at Baa3/Prime-3: (a) Bank of Baroda; (b) Bank of India; (c) Canara Bank; (d) Oriental Bank of Commerce; (e) Punjab National Bank; (f) Syndicate Bank; and (g) Union Bank of India.

The counterparty risk assessment of these banks was affirmed at Baa3(cr)/P-3(cr).

The agency also downgraded the long term local and foreign currency bank deposit ratings of Indian Overseas Bank (IOB) and Central Bank of India to Ba3 from Ba1.

In addition, Moody's downgraded IOB and Indian Overseas Bank, Hong Kong Branch's senior unsecured medium-term note program rating to provisional Ba3 from provisional Ba1 and IOB's Hong Kong branch's senior unsecured debt rating to Ba3 from Ba1. The long term CRA of these banks was also downgraded to Ba2(cr) from Ba1(cr).

Furthermore, the agency downgraded the standalone credit profile or the baseline credit assessment (BCA) of Syndicate Bank to ba3 from ba2, and as a result, downgraded the subordinated medium-term note and junior subordinated medium-term note program ratings of the bank to provisional Ba3 and provisional B1 from provisional Ba2 and provisional Ba3, respectively.

Moody's changed the outlook to stable from positive for Bank of Baroda and its London branch, Canara and its London branch, Punjab National Bank, and Syndicate and its London branch, changed the outlook to negative from positive for Bank of India and its London branch and Jersey branch, Oriental Bank of Commerce, and Union Bank and its Hong Kong branch, and changed the outlook to stable from negative for IOB and its Hong Kong branch.

The outlook for Central Bank of India remains stable.

The ratings of State Bank of India (SBI, Baa3 positive, ba1) and IDBI Bank Ltd. (Ba2 ratings under review, caa1) are not affected by this action.

Moody's said it uses the joint default analysis (JDA) model to determine government support for banks. Under JDA, the agency places each bank in a support bucket, which can be "very high," "high," "moderate" or "low." As a function of a government's sovereign credit rating and a bank's designated support bucket, JDA provides a range of potential notches of support.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.