Public sector lender Oriental Bank of Commerce (OBC) is mulling to raise capital worth Rs 1,000 crore. It is learnt that the bank would raise the capital through Basel-III-compliant tier-II bonds.
ICRA has granted “AA” rating for the bonds. The rating agency also revised the rating for UCO Bank’s tier-II bonds from “A+” to “A” on low capital adequacy and weak asset quality at the end of FY16.
For OBC, ICRA said the ratings have factored in the government’s majority ownership, which provided a strong likelihood of sovereign support to the bank.
Oriental Bank of Commerce had set up its franchises in northern parts of the country which yielded stable deposits and liquidity. The bank’s current capitalisation profile was comfortable against the regulatory minimum requirement. Yet, it would need to raise sizeable tier-1 capital (Rs 5,000-6,000 crore) over FY17-FY19 to meet Basel-III norms as well as for growth, ICRA remarked.
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