Days after the announcement of the merger of OBC and United Bank of India getting merged with PNB, Moody’s on Wednesday upgraded its outlook to positive from stable.
Days after the announcement of the merger of OBC and United Bank of India getting merged with PNB, Moody’s on Wednesday upgraded its outlook to positive from stable. In addition, the global rating agency maintained stable outlook on Canara Bank, OBC, Syndicate Bank and Union Bank. While the local and foreign currency deposit ratings of PNB were maintained at Ba1/NP, the local and foreign currency deposit ratings of Canara Bank, OBC, Syndicate Bank and Union Bank were affirmed at Baa3/P-3. PNB’s Baseline Credit Assessments (BCA) and adjusted BCA were affirmed at b1, Moody’s said in a release. The affirmation in outlook for PNB shows that bank’s BCA may improve after the capital infusion from the government and its financial metrics are expected to improve, it added.
Finance minister Nirmala Sitharaman last week announced that OBC and United Bank would be merged into PNB to create the largest state-run bank after SBI in the country. On the similar lines, Syndicate Bank will be merged with Canara Bank, and the new entity will be the fourth-largest public-sector bank (PSB). Union Bank, Andhra Bank and Corporation Bank will be merged and emerge as the fifth-largest PSB. And the amalgamation of Indian Bank and Allahabad Bank will lead to the seventh-largest state-run bank. After the merger, India will have 12 government banks.
Moody’s, however, also said that it could lower PNB’s BCA and ratings or change the rating outlook to stable if its asset quality, profitability and capital deteriorate on a standalone basis or as a result of the merger. The global rating agency could also change PNB’s outlook to stable if its post-merger capitalisation does not improve with respect to its standalone capital position, the release said.