IOB, OBC, Syndicate Bank down 2-3% on Moody's downgrade

Public sector lenders Indian Overseas Bank (IOB), Oriental Bank of Commerce (OBC) and Syndicate Bank were down 2-3 percent on Tuesday after the ratings agency Moody's downgraded the banks, although maintaining its stable outlook.

The report says, the global local currency deposit rating of OBC and Syndicate Bank has been lowered to Baa3/P-3 from Baa2/P-2.

Instruments rated 'Baa' are judged to be medium-grade and subject to moderate credit risk and as such may possess certain speculative characteristics

It further downgraded both the banks standalone ratings to 'D/ba2', which reflects its weak position when compared with its domestic and global peers, particularly in relation to asset quality.

"Syndicate Bank's weak asset quality and lack of income diversity is a situation which if prolonged, may pressure the bank's ability to generate internal capital in order to meet required levels of capital," Moody's Investor Services said in a statement.

It further said, "OBC's weak capacity to generate internal capital makes it reliant on government infusions to meet its capital requirements".

At 10:08 hours IST, shares of OBC slipped 2.08 percent to Rs 235 on Bombay Stock Exchange. Meanwhile, Syndicate Bank was down 2.98 percent to Rs 109.15 and IOB fell 1.97 percent to Rs 64.85.

(With inputs from PTI)