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Moody's Investors Service has downgraded the ratings of Union Bank of India by one notch.
The rating action considers that the bank's weaker financial metrics have pushed it into a lower standalone rating band, said Ms Beatrice Woo, Vice-President and Senior Credit Officer, Moody's.
In this regard, the agency, in particular, referred to the bank's high level of troubled assets, but low provision coverage.
Among the revised ratings, which carry stable outlooks are: Bank financial strength to ‘D' from ‘D+'; global local currency deposit to ‘Baa3/Prime-3' from ‘Baa2/Prime-2'; and foreign currency senior MTN programme to ‘(P)Baa3' from ‘(P)Baa2'.
The foreign currency long-term/short deposit ratings of ‘Baa3/Prime-3' are unaffected and carry stable outlooks.
“Notwithstanding our expectation that UBI's capital ratios will soon be boosted by a capital infusion, we view its loss-absorption cushion to be comparatively modest when considering its deteriorating asset quality and expected growth.
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