Fitch Upgrades 5 Indian Banks' Support Ratings on Government Equity Infusion

July 13, 2010: Fitch notes that the planned capital infusions could significantly improve the Tier 1 ratios of weaker performing government banks, and would provide timely support as the reported gross NPL ratios of these banks could deteriorate through FY11 due to maturing restructured loans.

These banks will also face higher demands on capital given the expected rise in loan growth. Maintaining a comfortable capital threshold and an improved performance outlook could result in selective upgrades of these banks' Individual and Long-term ratings.

Fitch has taken the following additional rating actions:

Dena Bank

- National Long-term rating: upgraded to 'AA-(ind)' from 'A+(ind)'; Outlook Stable; and

- INR4.5bn Lower Tier 2 subordinated bonds: upgraded to 'AA-(ind)' from 'A+(ind)'.

Oriental Bank of Commerce

- Support Rating Floor: upgraded to 'BB+' from 'BB-'.

The following comprises a full list of state-owned banks' Support ratings:

- Support Rating '2': State Bank of India, Punjab National Bank, Bank of Baroda, Bank of India, Canara Bank, IDBI Bank and Union Bank of India; and

- Support Rating '3': Indian Overseas Bank, Oriental Bank of Commerce, UCO Bank, Allahabad Bank, Corporation Bank, Indian Bank, Andhra Bank, Vijaya Bank and Dena Bank.

Indian Govt approves Infusion of Capital Worth Rs.6211 Crore in Five Public Sector Banks.... Read More


(Press release of Fitch Ratings)

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