By Jindal Haria

India Ratings and Research (Ind-Ra) has taken following rating actions on Syndicate Bank’s (Syndicate) debt instruments:

Instrument Type

Date of Issuance

Coupon Rate (%)

Maturity Date

Size of Issue (billion)

Rating/Outlook

Rating Action

Basel III-complaint Tier 2 bonds*

-

-

-

INR16

IND AA/RWE

Placed on RWE

Basel III AT1 perpetual bonds*

-

-

-

INR38

IND A+/RWE

Placed on RWE

Certificate of deposits

-

-

7-365 days

INR150

IND A1+

Affirmed

* Details are given in annexure table

 

KEY RATING DRIVERS

Ind-Ra has placed the ratings on RWN following finance ministry’s announcement dated 30 August 2019 on the proposed amalgamation of Canara Bank (Canara) (IND AAA/RWN) with Syndicate; with Canara being the absorbing bank post amalgamation.

 

As the announcements will be followed by multiple approvals at various levels including the boards of these banks, the agency has placed Syndicate under RWE. The key reasons for placing the ratings on RWE are the scale of the mergers and the potential integration-related challenges that may be encountered in the process; the banks may not be ready within the stipulated time (as may be determined later). The RWE indicates that the rating may be affirmed, downgraded or upgraded. Ind-Ra expects to resolve the RWE on the outcome of the merger and the availability of first set of consolidated quarterly financial results.

For Ind-Ra’s views on latest announcement on amalgamation or public sector banks, click here


COMPANY PROFILE

Headquartered in Bangalore, Syndicate is a public sector bank in India, with over 4,000 domestic branches as of end-March 2019.

 

FINANCIAL SUMMARY

 

Particulars

FY19

FY18

Total assets (INR billion)

3,112.8

3,239.8

Total equity (INR billion)

170.7

149.4

Net income/loss (INR billion)

-25.9

-32.2

Return on average assets (%)

-0.8

-1.0

Equity/assets (%)

5.48

4.61

Capital adequacy ratio (%)

12.0

14.2

Source: Syndicate, Ind-Ra


RATING HISTORY

Instrument Type

Current Rating/Rating Watch

Historical Rating/Outlook

Rating Type

Rated Limits (INR billion)

Rating

11 January 2019

21 December 2017

20 October 2016

Basel III-complaint Tier II bonds

Long-term

INR16

IND AA/RWE

IND AA/Negative

IND AA/Stable

IND AA+/Stable

Basel III AT1 perpetual bonds

Long-term

INR38

IND A+/RWE

IND A+/Negative

IND AA-/Stable

IND AA/Stable

Certificate of deposits

Long-term

INR150

IND A1+

IND A1+

IND A1+

-

ANNEXURE

Issue Name/ Type

ISIN

Date of Allotment

Tenor (years)

Maturity Date

Amount mobilised (billion)

Coupon rate

Put/Call option

Rating/Rating Watch

Rating Action

(% p.a.)

Basel III-complaint Tier II bonds

INE667A08096

3 May 2017

10

3 May 2027

INR5

8

Nil

IND AA/RWE

Placed on RWE

Total utilised

INR5

Total unutilised

INR11

Basel III AT1 perpetual bonds

INE667A08088

24 October 2016

Perpetual

Perpetual

INR10

9.95

Nil

IND A+/RWE

Placed on RWE

Basel III AT1 perpetual bonds

INE667A08062

30 March 2016

Perpetual

Perpetual

INR3.7

11.25

Nil

IND A+/RWE

Placed on RWE

Basel III AT1 perpetual bonds

INE667A08054

30 March 2016

Perpetual

Perpetual

INR5

11.25

Nil

IND A+/RWE

Placed on RWE

Basel III AT1 perpetual bonds

INE667A08070

15 July 2016

Perpetual

Perpetual

INR9.3

11.25

Nil

IND A+/RWE

Placed on RWE

Basel III AT1 perpetual bonds

INE667A08104

25 July 2017

Perpetual

Perpetual

INR4.5

9.80

Nil

IND A+/RWE

Placed on RWE

Total utilised

INR32.5

Total unutilised

INR5.5


COMPLEXITY LEVEL OF INSTRUMENTS

For details on the complexity level of the instruments, please visit https://www.indiaratings.co.in/complexity-indicators.

SOLICITATION DISCLOSURES

Additional information is available at www.indiaratings.co.in. The ratings above were solicited by, or on behalf of, the issuer, and therefore, India Ratings has been compensated for the provision of the ratings. 

Ratings are not a recommendation or suggestion, directly or indirectly, to you or any other person, to buy, sell, make or hold any investment, loan or security or to undertake any investment strategy with respect to any investment, loan or security or any issuer.

ABOUT INDIA RATINGS AND RESEARCH

About India Ratings and Research: India Ratings and Research (Ind-Ra) is India's most respected credit rating agency committed to providing India's credit markets accurate, timely and prospective credit opinions. Built on a foundation of independent thinking, rigorous analytics, and an open and balanced approach towards credit research, Ind-Ra has grown rapidly during the past decade, gaining significant market presence in India's fixed income market. 

Ind-Ra currently maintains coverage of corporate issuers, financial institutions (including banks and insurance companies), finance and leasing companies, managed funds, urban local bodies and project finance companies. 

Headquartered in Mumbai, Ind-Ra has seven branch offices located in Ahmedabad, Bengaluru, Chennai, Delhi, Hyderabad, Kolkata and Pune. Ind-Ra is recognised by the Securities and Exchange Board of India, the Reserve Bank of India and National Housing Bank. 

India Ratings is a 100% owned subsidiary of the Fitch Group.

For more information, visit www.indiaratings.co.in.

DISCLAIMER

ALL CREDIT RATINGS ASSIGNED BY INDIA RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTPS://WWW.INDIARATINGS.CO.IN/RATING-DEFINITIONS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE WWW.INDIARATINGS.CO.IN. PUBLISHED RATINGS, CRITERIA, AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. INDIA RATINGS’ CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE, AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE CODE OF CONDUCT SECTION OF THIS SITE.

Analyst Names

  • Primary Analyst

    Jindal Haria

    Director
    India Ratings and Research Pvt Ltd Wockhardt Towers, 4th floor, West Wing Plot C-2, G Block. Bandra Kurla Complex Bandra (East), Mumbai 400051
    +91 22 40001750

    Media Relation

    Namita Sharma

    Manager – Corporate Communication
    +91 22 40356121