Moody’s Investors Service recently allocated the CRR or the Counterparty Risk Ratings to as many as 15 rated banks and their branches including Syndicate Bank. Other 14 Indian banks which received the CRR are:
- Axis Bank Ltd
- Bank of Baroda (BOB)
- Bank of India (BOI)
- Canara Bank
- Central Bank of India (CBI)
- HDFC Bank Limited
- ICICI Bank Limited
- IDBI Bank Ltd
- Indian Overseas Bank
- Oriental Bank of Commerce (OBC)
- Punjab National Bank (PNB)
- State Bank of India (SBI)
- Union Bank of India (UBI)
- Yes Bank Limited
These CRRs are allocated to these 15 Indian banks in accordance with the CR Assessments.
CR Assessment of Syndicate Bank
It is also said, as per the business news that Moody Investors Service might upgrade the rating of the Syndicate Bank only in case the bank improves its profitability. It is equally important that the profitability is on the sustained basis and also if it’s capital position is strong enough considerably by way of external capital.
But, at the same time the rating of the Syndicate Bank may fall down just in case the credit losses lead to the adverse position of the bank’s capital. Also, if the government signifies that it will support which are below the expectations of the Moody’s may also cause the bank to have a lower rating.
The CRR are nothing but the views of the ability of entities to respect the uncollateralized part of non-debt CRR liabilities. The CRR also communicates and predicts the financial losses in a scenario where such liabilities are not honored. CRR liabilities basically means the business with the unrelated parties. If we look at some of the examples of CRR liabilities, it will include the uncollateralized portion of payables that comes from the derivatives transactions and also the uncollateralized portion of liabilities under the sale and repurchase promises. It is also important to know that CRR does not mean funding commitments or any other obligations like covered bonds, letters of credit, guarantees, servicer and trustee obligations, etc.
Since Moody’s believe that the nation does not operate in the resolution rule, in allocating the ratings to the Indian banks, Moody’s follows the basic Loss Given Failure, also called as LGF approach. The basic LGF analysis of Moody’s assigns CRRs in accordance with the bank’s CRA, one step above the banks’ adjusted BCAs, before the government offers support.
Also, the CRR includes between 0-3 notches of upgradation because of the Moody’s valuation of government offering support to these 15 banks as and when they need. Again, the upgradation are as per the CR Assessments.
Syndicate Bank is based in Bangalore. It has a total asset of INR 3.2 trillion or USD 50 billion as on March 2018. As in June 2018, the Syndicate Bank share price was last Rs. 52 last and its previous close was Rs. 51.45. The total number of shares that were traded during the day was 2,25,358 in more than 1243 trades. Also, the stock hit an intraday high of Rs. 53.5. The intraday low was Rs. 51.45. The net turnover during the day was Rs. 1,18,32,331.