CRISIL downgrades rating on ING VYSYA BANK to ‘AA/AA-’; removes from rating
watch *Lower Tier II Bonds Aggregating Rs.8.0 Billion * *AA/Negative
(Downgraded from AA+; Removed from ‘Rating Watch with Negative
Implications’) * *Rs.1.0 Billion Tier I Perpetual Bonds * *AA-/Negative
(Downgraded from AA; Removed from ‘Rating Watch with Negative Implications’)
* *Rs.2.0 Billion Upper Tier II Bonds * *AA-/Negative (Downgraded from AA;
Removed from ‘Rating Watch with Negative Implications’) * *Fixed Deposit
Programme * *FAAA/Negative (Reaffirmed; Removed from ‘Rating Watch with
Negative Implications’) * *Rs.35 Billion Certificates of Deposit Programme
* *P1+ (Reaffirmed) *
CRISIL has downgraded its ratings on ING Vysya Bank Ltd’s (ING Vysya’s)
long-term bonds to *‘AA/AA-’ *from ‘AA+/AA’, while removing the ratings from
*‘Rating Watch with Negative Implications’*. The rating on the fixed deposit
programme too has been removed from watch; the rating has been reaffirmed.
The outlook on the long-term debt and the fixed deposit programme is now *
‘Negative’*. CRISIL has also reaffirmed its rating on the bank’s
certificates of deposit programme at *‘P1+’*.
The downgrade in ratings on ING Vysya’s debt instruments follows the
downward revision in the ratings on ING Vysya’s single-largest shareholder
(44 per cent holding), ING Groep NV (ING Groep), to *‘A+/Negative/A-1’ *from
‘AA-/Negative/A-1+’ by Standard & Poor’s (S&P). The revision in S&P’s
ratings reflects deterioration in ING Groep’s earnings profile because of
investment-related losses in its insurance division, and the expectation of
higher credit costs in its banking business. The ‘Negative’ outlook reflects
S&P’s expectation of sustained pressure on the earnings profile of ING
Groep’s insurance and banking operations. CRISIL’s ratings on ING Vysya’s
debt instruments are centrally based on CRISIL’s expectation that ING Groep
will continue to provide operational, management, and funding support to ING
Vysya.
Earlier, on April 3, 2009, CRISIL had placed its ratings on watch following
a downward revision in S&P’s ratings on ING Groep. CRISIL had also sought to
assess the impact of the deterioration in ING Groep’s credit profile, the
worsening global economic condition, and the restrictions that some
sovereign governments have imposed on the use of funds given to support
financial institutions, on the likelihood of continued support to ING Vysya.
ING Groep has announced plans to concentrate on its core banking businesses
in Europe. CRISIL is of the opinion that ING Vysya is important to ING
Groep, given its plans to continue focusing on selected regions with
significant growth potential, outside Europe. CRISIL believes that ING Vysya
has a strong moral obligation to support ING Vysya because of the high
management control and the shared name. ING Groep consolidates the
financials of ING Vysya with that of itself. Also, CRISIL does not expect
ING Vysya’s future capital requirement to be high, given the current size of
its operations and its moderate expansion plans over the medium term.
Therefore, any incremental support to the bank is not likely to be affected
by the conditions associated with the financial support provided by the
State of The Netherlands to ING Groep. In 2008-09 (refers to financial year,
April 1 to March 31), ING Groep made an additional investment aggregating
Rs.2.95 billion in ING Vysya’s Tier I Perpetual bonds and Upper Tier II
bonds.
ING Vysya’s standalone credit profile is supported by its adequate asset
quality and capitalisation, average earnings profile, and moderate resource
profile.
*Outlook: Negative*
CRISIL believes that ING Vysya will continue to receive support from ING
Groep. The bank will maintain its adequate asset quality and capitalisation.
The ratings on ING Vysya may be downgraded in case of further deterioration
in ING Groep’s credit risk profile; additionally, material changes in ING
Vysya’s ownership or in ING Groep’s willingness and ability to support the
bank could result in a rating downgrade. The rating could also be downgraded
in case of deterioration in ING Vysya’s capitalisation. Conversely, the
outlook may be revised to ‘Stable’ if there is a corresponding revision in
S&P’s rating outlook on ING Groep.
*About the Bank *
ING Vysya had 478 branches and extension counters as on March 31, 2009, most
of them in Karnataka, Andhra Pradesh, and Tamil Nadu. For 2008-09, it
reported a profit after tax (PAT) of Rs.1.9 billion on a total income (net
of interest expenses) of Rs.12 billion, against a PAT and total income of
Rs.1.6 billion and Rs.9 billion, respectively, in the previous year. The
bank had total assets of around Rs.318 billion as on March 31, 2009, up from
Rs.254.6 billion as on March 31, 2008
*Media Contacts* *Analytical Contacts* *CRISIL Rating Desk* *Tanuja
Abhinandan*
Market Development & Communications
*CRISIL Ltd.*
Tel: +91-22-6758-8046
Facsimile: +91-22-6758-8088
*Email: [email protected]*
*Jyoti Parmar*
Market Development & Communications
*CRISIL Ltd.*
Tel: +91-22-6758-8054
Facsimile: +91-22-6758-8088
*Email: [email protected]* *Pawan Agrawal*
Director – CRISIL Ratings
Tel: +91-22-6691 3301
*Email: [email protected]*
*Suman Chowdhury*
Head - CRISIL Ratings
Tel: +91-22-6691 3293
*Email: [email protected]* Tel: +91-22-6691 3047 / 6691 3064
*Email: [email protected]*
--
Thanks & Regards,
Abhishek Kothari
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