SBI, UBI says no big impact of S&P downgrades

SBI said the downgrading will have no impact on it as S&P has only brought the rating on par with the sovereign rating

Mumbai: Ratings agency Standard & Poor's (S&P) has downgraded credit ratings of State Bank of India (SBI) and Union Bank of India (UBI) by a notch, but both the lenders said it will have no impact on them as as the agency has only brought the rating at par with the sovereign rating, reports PTI.
"We revised the stand-alone credit profile (SACP) of SBI to 'BBB-' from 'BBB', and that of UBI (Union Bank of India) to 'BB+' from 'BBB-' based on our anticipation of the banks' weak asset quality performance," S&P said in a statement.
The country's largest lender State Bank of India said the downgrading will have no impact on it as the rating agency has only brought the rating on par with the sovereign rating.
"This is not a downgrade per se, but only an equalisation of our ratings with that of the sovereign," SBI chairman Pratip Chaudhuri said, implying that the announcement by the world's largest rating agency will have little impact on the bank's ability to raise overseas funds.
Union Bank of India said it will have no impact on the bank's fund-raising as it has no plan to mop up overseas funds in the immediate future.
However, Union Bank of India CMD D Sarkar said, "it would have been better had S&P waited till the December quarter as the bank, since April, has done a lot on improving its asset quality.
"They should have looked at what we have done on the asset side. Whatever happened in June was an exception. We had clarified all that to them. But still they did not take those actions in consideration before arriving at their view."
Sarkar further said it doesn't matter much to a 95-year old institution like UBI. "Generalisation of a particular period for a medium term assessment is not something good.
"Any way it will have no material impact on cost of my funds as I have no MTN programme lined up for the mid to short- term," Sarkar said.
Angel Broking vice-president for research Vaibhav Agarwal said, "The only impact will be on the cost of foreign currency borrowing, as it will slightly rise for the public sector lender." 
"We revised the SACPs of SBI and UBI because we expect the banks' asset quality to remain weak and credit costs to stay high," the rating agency said.
The rating firm also expects SBI's and UBI's asset quality to remain stressed in the fiscal years ending 31 March 2013, and 2014, partly due to continued slippages in their restructured loan books.
On the asset quality, Agarwal differed with S&P saying though there will be pressure on the asset quality of SBI, it will be better in the second quarter.
The BBB minus rating is considered the lowest investment grade by market participants; 'BB+' is considered the highest.
The current rating by S&P on the sovereign is BBB-, one notch away from junk status. The agency also warned today that the country stands a one-in-three chance of getting downgraded to junk status in the next 24 months if growth peters out further and fiscal deficit overshoots by way of rising subsidy bills.


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Unitech to sell its entire stake in Uninor to Telenor

Unitech has 'agreed to dispose of its shareholding in Uninor for a nominal amount' and its nominees will withdraw from the Uninor Board with immediate effect

New Delhi: Realty company Unitech on Thursday said it would exit from telecom joint venture with Norway's Telenor by disposing of its entire shareholding in Uninor and both the parties have amicably settled all legal disputes between them, reports PTI. No financial details were provided by the company.


Telenor wanted to scrap the JV with Unitech and migrate the business to a new company to seek fresh operating licences as the JV's 22 telecom permits were among the 122 quashed by the Supreme Court in February.


Both the partners had filed cases against each other in courts and Company Law Board. In the joint venture, Telenor has 67.25% stake, while Unitech's shareholding is 32.75%.


"Telenor and Unitech are pleased to announce that on 10 October 2012, they have reached an agreement to amicably settle all disputes between the two parties," the realty firm said in a statement.


As per the agreement, Unitech and Telenor have agreed to transfer the business in Unitech Wireless (which operates under Uninor brand) to a new entity controlled by the latter.


Unitech said it has "agreed to dispose of its shareholding in Uninor for a nominal amount" and its nominees will withdraw from the Uninor Board with immediate effect.


"Subsequent to a successful business transfer and spectrum auction, all disputes and claims between the parties would be withdrawn," the statement said.


With the settlement of disputes with Telenor, Unitech Group will focus on its core business of real estate and monetise its land parcels across the country to enhance the stakeholder's value.


"We are pleased with the settlement reached between Unitech and Telenor. All existing disputes with Telenor are suspended and will be withdrawn upon successful transfer of business of Uninor to a new entity controlled by Telenor," Unitech Chairman Ramesh Chandra said.


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