Rating agency Fitch today downgraded Banglaore-based ING Vysya Bank's national long-term rating to ‘AA’ from ‘AA+' and revised its outlook to ‘negative’ from ‘stable’. At the same time, the agency downgraded the bank's Rs 390 crore subordinated debt rating to 'AA' from 'AA+', while affirming its individual rating at 'D' and support rating at '3'.
In a statement,the rating agency said the downgrade and outlook revision reflect Fitch's assessment that the ING Group's flexibility to support its minority (44 per cent) subsidiary in India has been diluted somewhat by its new “back to basics” strategy. Under this strategy, the group intends to focus predominantly on Europe, while pursuing selective growth opportunities elsewhere.
The statmement added that the downgrade of ING Vysya's national rating reflects Fitch's belief that the group is thus likely to re-prioritise allocation of its managerial and capital resources, and its assessment that the bank's financials remain weak relative to its peers.
As the national long-term rating continues to be support-driven it could be downgraded further over the next 12 to 18 months if there is indication of a further dilution of ING's flexibility to support ING Vysya.
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