Moody's downgrades OBC, Syndicate Bank ratings

Ratings agency Moody's today downgraded the ratings of Syndicate Bank and Oriental Bank of Commerce (OBC), but said the outlook is stable. The global local currency deposit rating of both the PSU bank has been lowered to Baa3/P-3 from Baa2/P-2.

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

"The outlook on the bank deposit rating is stable," Moody's said for both lenders. 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".