Public Sector Banks Have Been downgraded! The Government was NOT Sleeping as Mint does Claim! Because Downgraded Banks do include State Bank of India also! Mind you, India claimed Risilience against RECESSION just becuse of SBI and LIC! These Two institutions are TARGETED for DISINVESTMENT! As AIR INDIA has become SICK due to CONSPIRACY, SBI is also VISTIMISED ! IT is a Grand CONSPIRACY to Beunderstood!SBI has been downgraded to D+, at par with Bank of Baroda, Bank of India and PNB!
Public Sector Banks Have Been downgraded! The Government was NOT Sleeping as Mint does Claim! Because Downgraded Banks do include State Bank of India also! Mind you, India claimed Risilience against RECESSION just becuse of SBI and LIC! These Two institutions are TARGETED for DISINVESTMENT! As AIR INDIA has become SICK due to CONSPIRACY, SBI is also VISTIMISED ! IT is a Grand CONSPIRACY to Beunderstood!
SBI has been downgraded to D+, at par with Bank of Baroda, Bank of India and PNB!
Global ratings firm Moody's on Tuesday downgraded its rating of State Bank of India's (SBI) financial strength by one notch to ‘D+' on account of the lender's low Tier-I capital ratio and deteriorating asset quality.
The government has asked SBI to explain the reasons behind the downgrade by global ratings firm Moody's, the bank Chairman, Pratip Chaudhuri, said today.
"The government has asked us to give report on reasons for the downgrade," Chaudhuri told private news channel CNBC-TV18 in an interview.
Global ratings firm Moody's today downgraded its rating of SBI's financial strength by one notch to 'D+' on account of the lender's low Tier-I capital ratio and deteriorating asset quality.
"It is a downgrade of a small segment of the bank's debt," Chaudhuri said, adding SBI's overall rating is still a notch above sovereign rating.
Chaudhuri also said the State Bank of India (SBI) rights issue will restore the bank's rating.
"We will get capital from government by December or March next year," he said, adding,"...expect SBI's capital adequacy to be above 9 per cent by March 2012."
As per Moody's, a 'D' rating suggests "modest intrinsic financial strength, potentially requiring some outside support at times", while a 'C' rating denotes "adequate intrinsic financial strength".
Moody's cited a likely rise in the bank's non-performing assets in the near future as one of the reasons for the downgrade.
A day after downgrading its rating of public sector lender SBI's financial strength, Moody's today re-affirmed its rating for ICICI Bank and said the private sector lender continues to maintain a robust franchise and a strong liquidity, capitalisation and earnings profile.
State Bank Of India does not expectoverseas borrowing costs to rise "significantly" but sees medium-term note borrowing costs rising 1-2 basis points, its chairman said on Wednesday, a day after Moody's cut its rating and sent its shares skidding.
Shares in SBI continued to slide, touching their lowest level in more than two years, and were down about 2.6 percent at 1,741 rupees in early Wednesday trade, underperforming a broader market that was up by about 0.5 percent. The banks sub-index was off 1.31 percent.
Chairman Pratip Chaudhuri also told TV channel ET Now that the government should infuse 30-50 billion rupees ($611 million-$1 billion) of additional capital into the bank at the latest by the end of the fiscal year ending in March 2012.
Moody's on Tuesday downgraded the standalone rating for State Bank of India, the country's dominant lender, citing "modest" capital and weakening asset quality, sending its shares down as much as 6 percent.
Last month, State Bank of India, which is 59 percent owned by the government, doubled its overseas borrowing target to $10 billion, and Tuesday's rating cut could make its fund-raising more expensive and squeeze margins at its overseas operations.
"The international business scenario is different. There is an acute shortage of dollars. So no matter what the rating is, it is difficult to find dollars," Chaudhuri told ET Now.
SBI, which has a market value of about $23 billion, is currently borrowing overseas funds at LIBOR plus 220-225 basis points, Chaudhuri added.
"I think we can still visit the MTN market and raise money," he told the TV channel.
The bank has delayed a planned $4.5 billion rights issue, which would bolster its capital position, as India's cash-strapped government is seen to be reluctant to stump up its share of the offer in order to maintain its stake.
Moody's had said SBI's low capital adequacy and recent failure to raise capital prompted the downgrade of its "Bank Financial Strength Rating" to D+ from C- on a scale of A to E.
Public Sector Banks Have Been downgraded! The Government was NOT Sleeping as Mint does Claim! Because Downgraded Banks do include State Bank of India also! Mind you, India claimed Risilience against RECESSION just becuse of SBI and LIC! These Two institutions are TARGETED for DISINVESTMENT! As AIR INDIA has become SICK due to CONSPIRACY, SBI is also VISTIMISED ! IT is a Grand CONSPIRACY to Beunderstood!
SBI has been downgraded to D+, at par with Bank of Baroda, Bank of India and PNB!
Global ratings firm Moody's on Tuesday downgraded its rating of State Bank of India's (SBI) financial strength by one notch to ‘D+' on account of the lender's low Tier-I capital ratio and deteriorating asset quality.
The government has asked SBI to explain the reasons behind the downgrade by global ratings firm Moody's, the bank Chairman, Pratip Chaudhuri, said today.
"The government has asked us to give report on reasons for the downgrade," Chaudhuri told private news channel CNBC-TV18 in an interview.
Global ratings firm Moody's today downgraded its rating of SBI's financial strength by one notch to 'D+' on account of the lender's low Tier-I capital ratio and deteriorating asset quality.
"It is a downgrade of a small segment of the bank's debt," Chaudhuri said, adding SBI's overall rating is still a notch above sovereign rating.
Chaudhuri also said the State Bank of India (SBI) rights issue will restore the bank's rating.
"We will get capital from government by December or March next year," he said, adding,"...expect SBI's capital adequacy to be above 9 per cent by March 2012."
As per Moody's, a 'D' rating suggests "modest intrinsic financial strength, potentially requiring some outside support at times", while a 'C' rating denotes "adequate intrinsic financial strength".
Moody's cited a likely rise in the bank's non-performing assets in the near future as one of the reasons for the downgrade.
A day after downgrading its rating of public sector lender SBI's financial strength, Moody's today re-affirmed its rating for ICICI Bank and said the private sector lender continues to maintain a robust franchise and a strong liquidity, capitalisation and earnings profile.
State Bank Of India does not expectoverseas borrowing costs to rise "significantly" but sees medium-term note borrowing costs rising 1-2 basis points, its chairman said on Wednesday, a day after Moody's cut its rating and sent its shares skidding.
Shares in SBI continued to slide, touching their lowest level in more than two years, and were down about 2.6 percent at 1,741 rupees in early Wednesday trade, underperforming a broader market that was up by about 0.5 percent. The banks sub-index was off 1.31 percent.
Chairman Pratip Chaudhuri also told TV channel ET Now that the government should infuse 30-50 billion rupees ($611 million-$1 billion) of additional capital into the bank at the latest by the end of the fiscal year ending in March 2012.
Moody's on Tuesday downgraded the standalone rating for State Bank of India, the country's dominant lender, citing "modest" capital and weakening asset quality, sending its shares down as much as 6 percent.
Last month, State Bank of India, which is 59 percent owned by the government, doubled its overseas borrowing target to $10 billion, and Tuesday's rating cut could make its fund-raising more expensive and squeeze margins at its overseas operations.
"The international business scenario is different. There is an acute shortage of dollars. So no matter what the rating is, it is difficult to find dollars," Chaudhuri told ET Now.
SBI, which has a market value of about $23 billion, is currently borrowing overseas funds at LIBOR plus 220-225 basis points, Chaudhuri added.
"I think we can still visit the MTN market and raise money," he told the TV channel.
The bank has delayed a planned $4.5 billion rights issue, which would bolster its capital position, as India's cash-strapped government is seen to be reluctant to stump up its share of the offer in order to maintain its stake.
Moody's had said SBI's low capital adequacy and recent failure to raise capital prompted the downgrade of its "Bank Financial Strength Rating" to D+ from C- on a scale of A to E.
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State Bank of India (SBI) hopes to receive an injection of up to $2 billion from the government this fiscal year, its chairman said on Wednesday, a day after Moody's downgraded its standalone rating due to rising bad loans and a thinning capital cushion.
Shares in the country's dominant lender continued to slide, falling as much as 3.9 percent to their lowest in more than two years and helping drag the broader market into negative territory.
"We have taken note of this message and recapitalisation, we are hopeful, will be completed by the end of December 2011 and at the most, if it is stretched, it will go to March," Chairman Pratip Chaudhuri told a media briefing.
He said the bank has outlined to the government scenarios under which it would need 140 billion to 210 billion rupees ($2.84 billion-$4.26 billion) of state capital over five years, and would be "comfortable" with 30 billion to 100 billion rupees of fresh government capital in the current fiscal year.
The size of the injection depends on the contribution of minority shareholders as well as the surplus generated by the bank's operations, he said.
Last month, State Bank of India, which is 59 percent owned by the government, doubled its overseas borrowing target to $10 billion, and Tuesday's rating cut could make its fund-raising more expensive and squeeze margins at its overseas operations.
However, Choudhuri earlier told TV channel ET Now that SBI does not expect overseas borrowing costs to rise "significantly" as a result of the Moody's move, with medium-term note borrowing costs rising 1-2 basis points.
SBI, which has a market value of about $23 billion, is currently borrowing overseas funds at LIBOR plus 220-225 basis points, Chaudhuri told ET Now.
The bank has delayed a planned $4.5 billion rights issue, which would bolster its capital position, as India's cash-strapped government is seen to be reluctant to stump up its share of the offer in order to maintain its stake.
Moody's had said SBI's low capital adequacy and recent failure to raise capital prompted the downgrade of its "Bank Financial Strength Rating" to D+ from C- on a scale of A to E.
"Moody's believes that the probability of systemic support for ICICI Bank is high, given its sizeable retail deposit franchise as well as its importance to the national payment system as the second-largest commercial bank," the ratings agency said.
The reiteration of a financial strength rating of 'C-' for ICICI Bank came a day after Moody's downgraded SBIfrom 'C-' to 'D+' on account of the public sector lender's deteriorating asset quality and rising non-performing assets (NPAs).
A 'D' rating suggests "modest intrinsic financial strength, potentially requiring some outside support at times", while a 'C' rating denotes "adequate intrinsic financial strength".
On ICICI Bank, Moody's said the rating reflects the bank's solid franchise as the second-largest commercial bank in India.
"In addition, strong capitalisation, liquidity and earnings profile support the rating.
"The rating also reflects its high borrower concentration in the form of mandatory government securities portfolio, weaker asset quality compared with peers, a difficult operating environment due to rising interest rates, uncertainty in the global economy and the intense competition it faces in domestic markets," Moody's said.
ICICI Bank, India's largest private sector lender, has an asset base of USD 90 billion. The private lender had over 2,500 branches and over 6,000 ATMs at the end of last fiscal.
It has three main business lines -- retail banking; wholesale banking, including corporate and investment banking; and international banking.
According to Moody's, after consolidating its business for two years in order to overcome the difficult economic conditions and rising delinquency in consumer loans, ICICI Bank posted moderate asset growth of 12 per cent in 2010-11.
"By leveraging its technological investments and favorable personnel profile, it has developed systems and procedures to offer efficient banking services to Indian customers. The acquisition of Bank of Rajasthan in August, 2010, has also helped in strengthening the franchise and branch network in northern India," it said.
According to Moody's, ICICI Bank is one of the few financial services brands from India that is recognised in developed Asian and Western financial markets.
“Moody's Investors Service has downgraded the State Bank of India's bank financial strength rating (BFSR), or standalone rating, to ‘D+' from ‘C—',” the agency said in a statement.
As per Moody's, a ‘D' rating suggest “modest intrinsic financial strength, potentially requiring some outside support at times,” while a ‘C' rating denotes “adequate intrinsic financial strength.''
Moody's cited a likely rise in the bank's non-performing assets in the near future as one of the reasons for the downgrade. “The rating action considers SBI's capital situation and deteriorating asset quality. Our expectations that NPAs are likely to continue rising in the near term — due to higher interest rates and a slower economy — have caused us to adopt a negative view on SBI's creditworthiness,” Moody's Vice-President and Senior Credit Officer Beatrice Woo said. The standalone rating for SBI's private sector competitors such as ICICI Bank, HDFC Bank and Axis Bank, stands at ‘C—'
“The revised rating maps to a baseline credit assessment (BCA) of Baa3. As a result of the lower BCA, the hybrid debt rating was downgraded to Ba3(hyb) from Ba2(hyb).
“The revised BFSR carries a stable outlook and the hybrid rating a negative outlook,” Moody's said, adding that other credit ratings of the bank are unaffected.
The ratings downgrade puts pressure on the government to infuse capital in the country's largest lender as soon as possible.
“Notwithstanding our expectations that SBI's capital ratios will soon be restored through a capital infusion by the government, SBI's efforts to secure this capital for the better part of the year demonstrates the bank's limited ability to manage its capital,” the Vice-President said.
Soaring NPAs
SBI's NPAs reached a three-year high of 3.52 per cent of loans for the quarter ended June 30.
“Against the backdrop of a slowing economy and higher interest rates, the rising trend evident in SBI's new NPA formation rate since the third quarter of 2010-11 will continue. Therefore, Moody's expects SBI's potential credit costs will be relatively high in the near-term. NPA — as a percentage of the bank's Tier-I capital ratio — is now about 43 per cent,” the agency said. Moody's said that under a stress scenario, which assumed a gross NPA ratio of 12.07 per cent, SBI would require $8 billion to replenish its Tier-I capital ratio to 8 per cent.
Shares of State Bank of India took a beating on the bourses for the second consecutive session on Wednesday, losing more than 3 per cent in early trade after Moody’s downgraded its rating of the bank’s financial strength.
The stock, which settled with a loss of over 4 per cent yesterday, declined further by 3.09 per cent in morning trade today to a 52-week low of Rs. 1,731.40 on the Bombay Stock Exchange.
A similar trend was witnessed on the National Stock Exchange, where the stock, after opening on a weak note, declined by over 3.19 per cent to a 52-week low of Rs 1,730.10.
The stock ended with losses of 3.63 per cent at Rs 1,787.20 on Tuesday.
However, it managed to regain some of the lost ground and was trading 2,61 per cent lower at Rs 1,740 on the BSE and was down 2.69 per cent at Rs. 1,739.05 on the NSE at 1059 hours.
Global credit ratings firm Moody’s on Tuesday downgraded its guidance on SBI’s financial strength by one notch to ‘D+’ on account of the lender’s low Tier-I capital ratio and deteriorating asset quality.
As per Moody’s, a ‘D’ rating suggest “modest intrinsic financial strength, potentially requiring some outside support at times”, while a ‘C’ rating denotes “adequate intrinsic financial strength“.
Moody’s cited a likely rise in the bank’s non-performing assets in the near future as one of the reasons for the downgrade.
“The government has asked us to give a report on the reasons for the downgrade,” SBI Chairman Pratip Chaudhuri told private news channel CNBC-TV18 in an interview.
The standalone rating for SBI’s private sector peers, like ICICI Bank, HDFC Bank and Axis Bank, stands at ‘C-’
The ratings downgrade puts pressure on the government to infuse capital in the country’s largest lender as soon as possible.
The BSE Sensex fell for a fourth straight session on Wednesday, dropping 0.5 percent to its lowest close in nearly 20 months, as financial stocks continued to flounder a day after a rating downgrade of top lender State Bank of India.
Continuing foreign fund outflows amid lingering worries over global economic growth weighed despite firm Asian and European stocks after Europe's finance ministers agreed to safeguard euro zone banks from the spreading sovereign debt crisis.
The main 30-share BSE index fell 0.46 percent or 72.45 points to 15,792.41, its lowest close since Feb 5, 2010, with 16 of its components ending lower. The index, which had lost 5 percent in the past three sessions, rose as much as 1.1 percent in early trade.
"Fresh buying is not happening at all. What we are seeing are mainly operator-driven positions. Overall, we don't foresee the market going up until investor-driven buying comes in," said R.K. Gupta, managing director at Taurus Asset Management.
The main index is down nearly 23 percent this year to be among one of the world's worst-performing equity markets, weighed down by foreign fund outflows, rising interest rates and a series of alleged scandals that have hampered government policy-making.
Foreign funds have been net sellers of more than $300 million in shares this year, after purchasing a record net $29.3 billion in 2010.
Financial stocks extended losses a day after ratings agency Moody's Investors Service downgraded State Bank of India's standalone rating due to rising bad loans and a thinning capital cushion.
Earlier on Wednesday, SBI Chairman Pratip Chaudhuri said the bank hopes to receive a capital injection of up to $2 billion from the government this fiscal year.
But that did not stop SBI from slipping 3.9 percent, extending Tuesday's 4 percent fall to a more than 2-year intra-day low. The No.2 lender ICICI Bank lost 2.7 percent, while HDFC Bank shed 2.3 percent. The sector index closed down 2.4 percent.
"Globally, the financial system is undergoing a lot of stress and there is uncertainty everywhere. The investor confidence is entirely shaken," said K.K. Mital, head of portfolio management services at Globe Capital Market in New Delhi.
Software services exporters, which get majority of their revenue from the United States, gained on hopes of a stable environment after Federal Reserve Chairman Ben Bernanke promised on Tuesday more economic stimulus if needed.
India's No. 2 software exporter, Infosys Ltd , which will report quarterly earnings on Oct. 12, rose 0.4 percent. But larger rival Tata Consultancy , which remained in the green for most of the day, slipped 0.2 percent.
A sharp fall in the Indian rupee against the dollar is seen positive for these firms, which derive bulk of their revenue in foreign currencies but spend mostly in the local currency.
Energy major Reliance Industries , which has the biggest weighting on the BSE index, fell 0.6 percent to 767 rupees. Shares in Reliance have lost more than 27 percent of their value in 2011 on concerns over slowing output at one of its key gas fields.
Automakers were among the gainers, mainly on short covering by investors ahead of Thursday's market holiday, amid hopes of festive-season demand boosting sales.
Utility vehicle maker Mahindra and Mahindra , Tata Motors and two-wheeler maker Bajaj Auto all gained between 0.4 to 1 percent.
Coal India , the world's largest coal miner, ended 1.5 percent higher at 324.70 rupees. The state-run firm has lost more than 10 percent of its value in the past two weeks on worries that a new mining bill could impact profitability.
The NSE 50-share index was down 0.44 percent to 4,751.30 points.
In the broader market, 933 losers outpaced 503 gainers on moderate volume of about 507.4 million shares.
The MSCI's broadest index of Asia-Pacific shares outside Japan ended up 0.6 percent, while Japanese shares were down 0.9 percent.
STOCKS THAT MOVED
* Engineering and construction firm Punj Lloyd Ltd rose 1.1 percent to 52.95 rupees after it secured a contract from Qatar Solar Technologies for the emirate's first polysilicon plant.
* Ashok Leyland , India's second largest commercial vehicle maker, fell 1.6 percent to 24.60 rupees after its September vehicles sales fell 17 percent.
* Rolta India fell 9.2 percent to 70.30 rupees on market talk that its promoters had pledged 92.5 percent of their holdings. The software services firm clarified after market hours that the promoter group has pledged 12 percent of its total holding in the company.
MAIN TOP THREE BY VOLUME
* Jaiprakash Associates on 28.2 million shares
* Unitech on 15.5 million shares
* Hindalco on 13.9 million shares
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