'BBB-', 'A-3' ratings to Syndicate Bank

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Syndicate Bank
Singapore, Mar 24: Standard&Poor's Ratings Services today said it assigned its 'BBB-' long-term and 'A-3' short-term counterparty credit ratings to India's Syndicate Bank.

The outlook is stable. At the same time, Standard&Poor's assigned its 'C' bank fundamental strength rating on Syndicate Bank. ''The ratings reflect Syndicate Bank's average business profile and adequate profitability, and its satisfactory funding and liquidity profile,'' said Standard&Poor's credit analyst Ivy Tan. ''A constraining factor is Syndicate Bank's below average asset quality, contributed mostly from its retail portfolio.

With 36.5 per cent of its loans acquired between April 2006 and September 2007, the bank is exposed to the risk of rising nonperforming loans as they become seasoned,'' she said.

''The ratings also reflect our expectation that the government will provide extraordinary support to the bank in a distress situation,'' Ms Tan added.

As of September 30, 2007, Syndicate Bank reported bank-only assets of Indian rupee (INR) 934.6 trillion; the bank has a sizeable distribution network of 2,136 domestic branches in 27 states and four Union Territories, and one overseas branch in London.

The Indian government currently holds a 66.47 per cent stake in the bank, which may be reduced to 57.63 per cent after the proposed public offer.

''We expect Syndicate Bank will continue to benefit from its majority government ownership and the proposed public offering will proceed as scheduled. Significant weakening of the bank's financial profile, in particular asset quality and earnings, will place downward pressure on the ratings,'' she said.

''Conversely, the ratings could be raised if we perceive that there is an improvement in asset quality and earnings driven by sustainable initiatives,'' she added.


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