On March 21, the Government of India, via the Specified Undertaking of UTI (SUUTI), sold 9% of its stake in Axis Bank (Baa3 stable, D+/baa3 stable) in the open market. Following the sale, the government still holds a 11.7% stake in the bank via SUUTI.
"The government's non-controlling interest did not separately factor into our rating of Axis, and the partial sale of it accordingly does not impact our credit analysis of the bank," says Srikanth Vadlamani, a Moody's Vice President and Senior Analyst.
In contrast to public sector banks, Moody's ratings for private sector banks do not factor in any ongoing support from the government, whether in the form of annual capital injections or through other means.
Nevertheless, Axis Bank's issuer and long-term ratings continue to incorporate a one-notch uplift based on Moody's assumption of government support in times of stress. However, such assumption of systemic relate is unrelated to the government's stake in the bank.
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