 "Oriental Bank of Commerce to raise Rs 1,000 cr via tier-II bonds")
Public sector lender Oriental Bank of Commerce (OBC) is to raise capital worth Rs 1,000 crore through Basel-III-compliant tier-II bonds. Icra has granted "AA" rating for the bonds.
The rating agency also revised the rating for UCO Bank's tier-II bonds from "A+" to "A" on low capital adequacy and weak asset quality at the end of FY16.
For OBC, Icra said the ratings have factored in the government's majority ownership, which provided a strong likelihood of sovereign support to the bank. The bank had established franchises in Northern India, giving it a stable deposit profile and comfortable liquidity position. OBC's current capitalisation profile was comfortable against the regulatory minimum requirement. Yet, the bank would need to raise sizeable tier-1 capital (Rs 5,000-6,000 crore) over FY17-FY19 to meet Basel-III norms as well as for growth, Icra said.
UCO Bank's capital adequacy is low (tier-I capital of 7.63 per cent and capital to risk weighted assets ratio of 9.63 per cent as on March 31, 2016). The asset quality is also weak and weak asset quality (net non-performing assets of 9.09 per cent at end of March 2016.
The rating agency also revised the rating for UCO Bank's tier-II bonds from "A+" to "A" on low capital adequacy and weak asset quality at the end of FY16.
For OBC, Icra said the ratings have factored in the government's majority ownership, which provided a strong likelihood of sovereign support to the bank. The bank had established franchises in Northern India, giving it a stable deposit profile and comfortable liquidity position. OBC's current capitalisation profile was comfortable against the regulatory minimum requirement. Yet, the bank would need to raise sizeable tier-1 capital (Rs 5,000-6,000 crore) over FY17-FY19 to meet Basel-III norms as well as for growth, Icra said.
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The ratings were constrained on account of significant weakness in asset quality profile and consequent impact on profitability during last two years.
UCO Bank's capital adequacy is low (tier-I capital of 7.63 per cent and capital to risk weighted assets ratio of 9.63 per cent as on March 31, 2016). The asset quality is also weak and weak asset quality (net non-performing assets of 9.09 per cent at end of March 2016.