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Moody's downgrades subdebt ratings of 11 Indian banks

Last Updated: Thu, Sep 05, 2013 06:40 hrs
Moody's sign on 7 World Trade Center tower in New York

Rating agency Moody's Investors Service today downgraded the subordinated debt (subdebt) and junior subordinated debt ratings of 11 Indian banks.

The 11 banks affected include 8 public sector banks and three private sector banks.

Moody's has removed one to two notches of the two to three notches systemic support uplift previously incorporated in the public sector banks' subdebt and junior subdebt ratings, concluding a review started on 3 June 2013, the rating agency said in a statement.



Moody's also removed the one notch support uplift incorporated in the private sector banks' subdebt and junior subdebt ratings.

"Increasing international trend of imposing losses on holders of subdebt securities (creditor "bail-in") is a pre-condition for distressed banks to receive government support. As a consequence, Moody's assumes that Indian government support is less likely to be forthcoming for the holders of such securities," it stated.

"The global financial crisis has demonstrated that support can be provided selectively, with the costs being shared with subordinated creditors of a bank, without triggering any contagion, as it was previously feared", said Gene Fang, vice president, Moody's.

The banks' senior obligation ratings and their stand-alone baseline credit assessments were not affected.

Public Sector Banks

- Bank of Baroda (deposits Baa3 stable, BFSR D/BCA ba2 negative)

- Bank of India (deposits Baa3 stable, BFSR D/BCA ba2 negative)

- Canara Bank (deposits Baa3 stable, BFSR D/BCA ba2 negative)

- IDBI Bank Ltd (deposits Baa3 stable, BFSR D-/BCA ba3 stable)

- Indian Overseas Bank (deposits Baa3 negative, BFSR D-/BCA ba3 negative)

- State Bank of India (deposits Baa2 stable, BFSR D+/BCA ba1 stable)

- Syndicate Bank (deposits Baa3 stable, BFSR D/BCA ba2 negative)

- Union Bank of India (deposits Baa3 stable, BFSR D/BCA ba2 negative)

Private Sector Banks

- Axis Bank Limited (deposits Baa2 stable, BFSR D+/BCA baa3 stable)

- HDFC Bank Limited (deposits Baa2 stable, BFSR D+/BCA baa3 stable)

- ICICI Bank Limited (deposits Baa2 stable, BFSR D+/BCA baa3 stable)

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